FL Equity

Question 1

4 most common equitable remedies:

Answer 1

(1) injunction
(2) specific performance
(3) rescission and reformation
(4) restitution

Question 2

Most frequently encountered equitable defenses:

Answer 2

(1) Unclean hands
(2) Time bar (laches)
(3) Impossibility or undue hardship
(4) Freedom of speech

Question 3

General requirements for injunctive relief:

Answer 3

(1) Legal remedy is inadequate
(2) Enforcement of injunction is feasible
(3) Hardship to ∆ does not outweigh benefit to π
(4) No defenses available

Question 4

Most common examples of legal remedy being inadequate:

Answer 4

(1) Subject matter of litigation is unique or rare (real property);
(2) Damages are speculative or uncertain;
(3) Where multiple lawsuits are required;
(4) Insolvency of ∆
(5) Where irreparable harm results form ∆’s conduct which cannot be fully compensated

Question 5

For an equitable remedy to be feasible there must be present in the forum state either:

Answer 5

(1) A person ordered to act; or

(2) Object that is the purpose of where the suit is located

Question 6

Equity might decline mandatory relief if:

Answer 6

(1) Too difficult to enforce order;
(2) Act to be performed involves matters of personal taste and/or act to be performed requires skill or is very complex;
(3) Act beyond ∆’s ability to perform
(4) Court traditionally refuses to order performance of personal service contract

Question 7

A agreed to sell B a 2010 white Honda Accord EX. A refuses to deliver the car even though B is ready to pay the agreed price. B asks the court to order A to deliver the car. What result and why?

Answer 7

No equitable remedy - look for actual damages.

K price - cover = damages

Question 8

A agreed to sell B Elvis’ Cadillac. A refuses to deliver the car even though B is ready to pay the agreed price. B asks the court to order A to deliver the car. What result and why?

Answer 8

Equitable remedy available; maybe specific performance

Because unique good

Question 9

C agreed to sell D five acres of land. C refuses to convey, even though D is ready to pay the agreed price. There are several nearly identical five-acre tracts nearby. D asks the court to order C to convey. What result and why?

Answer 9

Equitable relief available because land is unique.

Question 10

Every weekend C drives across D’s farm to get to a lake cottage. D asks the court to order C to stop. What result and why?

Answer 10

Equitable relief is available to prevent him from getting an easement by prescription. Injunction.

Question 11

E agreed to sell F some silverware that belonged to their grandparents. The same silverware pattern can be purchased at any department store for the agreed price. F wants the court to make E deliver the silverware. What result and why?

Answer 11

Equitable relief available because of sentimental value.

Question 12

As part of a divorce suit, W asks a court to order H to convey some real estate standing in H’s name which W contends belongs to her. Neither H nor the real estate is located in the forum state. What result and why?

Answer 12

No equitable relief available. Out of court’s jurisdiction over husband or property. Can’t enforce.

Question 13

Perot hired a world-famous artist to paint a “good likeness” of him. When the portrait is finished, Perot does not think that it looks at all like him (the ears are too large). Perot wants the court to order the artist to correct the portrait. Will he be successful?

Answer 13

No because it is a matter of personal taste.

Question 14

L hired M, a prominent architect, to design a new office building. M now refuses to do so and has instead agreed to design a new office building for N, a competitor of L. L wants the court to order M to perform their agreement. What result and why?

Answer 14

Won’t enforce person service contract, but may order M not to build for N.

Question 15

Injunctions are normally available for:

Answer 15

(1) Continuous trespass to land
(2) Conversion of a unique chattel
(3) To prevent the continuation of a wrongfully instituted suit whether that suit is (a) malicious or (b) suit brought in other state that doesn’t have jurisdiction

Question 16

Injunctions are sometimes available to eliminate a nuisance:

Answer 16

(1) Provided it is a private nuisance
(2) but not if it is a public nuisance
Unless: πcan show a special damage (different from all others in community)

Question 17

Injunctions are sometimes available to prevent waste:

Answer 17

(1) Provided it is destructive or permissive
(2) But generally not if it is ameliorative
Note: some ameliorative waste may be enjoined (i.e., tearing down a historic home to replace it with apartments)

Question 18

Injunctions are sometimes available to prevent enforcement of a fraudulently obtained judgment:

Answer 18

(1) provided it was obtained by extrinsic fraud (bribery, judges, jurors)
(2) but not if it was obtained by intrinsic fraud (things occurring in the trial)

Question 19

Injunctions are sometimes available for inducing breach of contract and/or refusal to deal

Answer 19

When a ∆ encourages someone to breach a contract with a competitor or to refuse to enter into or continue a relationship with a competitor, an injunction may be granted unless the ∆’s conduct is privileged.

This is tortious interference with a business relationship!

Question 20

Elements for tortious interference with a business relationship:

Answer 20

(1) Valid contractual relationship
(2) ∆ knows of relationship
(3) ∆ induces breach
(4) π suffers damages

Question 21

Factors the court considers in determining whether a privilege exists:

Answer 21

(1) What kind of relationship is ∆’s conduct affecting?
(2) What is the nature of ∆’s conduct?
(3) What is the relationship between the parties?
(4) What are ∆’s motives?
(5) What social interest might be advanced?

Question 22

Equity justifies the protection of trade secrets by applying one or more of the following legal theories:

Answer 22

(a) Property right - trade secret is a property right
(b) Fiduciary relationship - using relationship to help self not ok
(c) Contract relationship - to not reveal…

Question 23

Injunctions are normally NOT available for:

Answer 23

(1) Defamation (sue for slander/libel)
(2) Trade libel
(3) Publication of private facts
(4) Equity generally will not enjoin pending criminal proceedings, and will enjoin threatened criminal proceedings only under extraordinary circumstances.

Question 24

Two kinds of temporary injunctive relief available:

Answer 24

(1) With notice to adverse party

(2) Without notice to adverse party (a) violating trademark, copyright; (b) domestic violence

Question 25

To obtain temporary injunctive relief, you must show:

Answer 25

(1) That it is necessary to preserve status quo

2) Likelihood of prevailing at trial (reasonable probability of prevailing

Question 26

Instituted by a private party, as part of an underlying action in order to:

(a) Compensate π for damages caused by ∆’s disobedience of court order;
(b) Can be coercive to prevent further losses

Answer 26

Civil Contempt

Question 27

Brought by the government to punish errant behavior. Its purpose is to uphold the dignity of the court.

Answer 27

Criminal Contempt

Question 28

Criminal Contempt can be further classified as either:

Answer 28

(1) Direct - in presence of judge

(2) Indirect - action that occurs outside presence of court; need testimony + hearing to show violated

Question 29

Equitable remedy by which a party to a contract is ordered to perform according to its terms.

Answer 29

Specific Performance

Question 30

To obtain specific performance you must show ALL of the following:

Answer 30

(1) Valid contract (most important!)
(2) All contractual conditions have been fulfilled
(3) Mutuality of remedies exist (if B can get, S can too)

Question 31

To establish that a valid contract exists, you must demonstrate:

Answer 31

(1) Certainty of terms

(2) Consideration

Question 32

To prove certainty of terms, the contract itself (or parol evidence admitted to show certainty) must be certain as to its material terms which usually include:

Answer 32

(1) Identity of parties
(2) Price/value
(3) Time & manner of payment
(4) Description of subject matter of contract, including material terms

Question 33

This condition requires full performance by a specified date. Failure to comply with this condition can prevent specific performance unless the equity court chooses to ignore strict enforcement of this clause.

Answer 33

A time is of the essence clause.

Question 34

Failure to comply with a time is of the essence clause can prevent specific performance unless the equity court chooses to ignore strict enforcement of this clause because:

Answer 34

(1) When tardiness is diminimas (slight);
(2) Loss to the other party is slight;
(3) Undue hardship to forfeiting party; or
(4) Equity will go out of its way to find a waiver

Question 35

If a seller can not convey marketable title equity will not normally grant specific performance unless:

Answer 35

(1) The deficiencies are minor, in which case specific performance may be granted with reasonable reduction in the price; or
(2) When the buyer waives the deficiencies, again specific performance may be granted with reasonable reduction in the price.

Question 36

Two types of mutuality:

Answer 36

(1) Affirmative Mutuality

(2) Negative Mutuality

Question 37

One party should be allowed to enforce the contract because the other party would have been allowed to enforce it (e.g., since the buyer can get specific performance of a land sale contract, the seller can too, even though the seller will only get its money).

Answer 37

Affirmative Mutuality

Question 38

One party to a contract is not entitled to specific performance unless the other parties would also be entitled to have the contract specifically enforced. There has been considerable evolution and weakening of this requirement. Most states now apply the pragmatic Restatement approach. The remedies are mutual if:

(a) Both parties are capable of performing and
(b) Counter-performance may be sufficiently secured to the satisfaction of the court (i.e., the court can compel the π to perform what he or she promised to perform).

Answer 38

Negative Mutuality

Question 39

If a contract to sell real estate is entitled to specific enforcement the doctrine of _______________ takes effect. Basically, the buyer is considered the equitable owner of the property upon executing the contract. The seller retains only a security title until the purchase price is paid. Record title is transferred at closing.

Answer 39

Equitable Conversion

Question 40

According to the common law (which is followed in FL, unless the loss was caused by the seller’s negligence) absent an agreement to the contrary: The _______ has the risk of loss if the building is damaged or destroyed before closing. The seller is entitled to specific performance without reduction in the price (though the buyer may have the right in equity, under a constructive trust theory, to any insurance proceeds collected by the seller).

Answer 40

Buyer

Question 41

The view in some states (as set forth in the Uniform Vendor and Purchaser Risk Act) is that (minority view): The _________ has the risk of loss until possession is delivered.

Answer 41

Seller

Question 42

With an option contract, equitable conversion occurs in FL when __________________.

Answer 42

The option is exercised (not when the option contract is made)

Question 43

Specific performance of a land contract can be achieved by:

Answer 43

(1) Ordering the seller to convey, and the buyer to pay or

(2) Transferring title by court order upon payment

Question 44

If the buyer, seller, and property are all before the court:

Answer 44

Either form of specific performance will be feasible

Question 45

If only buyer and property are present:

Answer 45

Specific performance is ok - the court can transfer title

Question 46

If only buyer and seller are present:

Answer 46

Specific performance is ok - court compels buyer to pay and seller to convey

Question 47

If only seller and property are present:

Answer 47

Specific performance is probably not ok

Question 48

A agrees to sell B a “valuable piece of artwork” at a “reasonable price.” A refuses to deliver any artwork to B. Can B obtain specific performance?

Answer 48

Good is unique, but terms are too vague. Probably cannot obtain specific performance.

Question 49

C agreed to sell D a home. The contract required closing on April 1st and contained a time is of the essence clause. D was 2 months late coming up with the purchase price. In the meantime, C had agreed to sell the home to E. Can D obtain specific performance? What if D had been only 1 day late with the purchase price, and C had not yet agreed to sell the home to anyone else?

Answer 49

Probably not because too much time had passed.

1 day late, maybe ok because the harm would be de minimus.

Question 50

F agreed to sell G 100 acres of land. F has marketable title to 99 acres, but title to the remaining acre is in doubt. Can F, the seller, obtain specific performance?

Answer 50

Depends on if the remaining acre is material. If yes, can’t enforce. If no, can be enforced.

Question 51

F agreed to sell G 100 acres of land. F has marketable title to 99 acres, but title to the remaining acre is in doubt. Can G, the buyer, obtain specific performance?

Answer 51

Yes because waives the defect/deficiencies.

Question 52

J agreed to sell 2 acres of land to K (age 17). J refuses to convey. Can K obtain specific performance?

Answer 52

Old rule: no because contract with a minor (voidable)

New rule: Yes, both are capable of performance

Question 53

L agreed to sell M a home. Before closing, the home was destroyed by fire. L collected the insurance proceeds. M refuses to close unless L reduces the price. Can L obtain specific performance?

Answer 53

Yes. Risk of loss is on buyer, but insurance proceeds held in constructive trust for him.

Question 54

If there is a covenant not to compete, equity will grant specific performance if the contract is reasonable as to:

Answer 54

(1) activities prohibited
(2) geographic areas
(3) duration in time

Question 55

If protection is sought for a trade secret, a restraint of no more than _________ is presumed reasonable, and a restraint of more than _________ is presumed unreasonable.

Answer 55

5 years; 10 years

Question 56

If the ∆ is a former employee, agent, or independent contractor, and the case does not involve the sale of business assets, the shares of a corporation, a partnership interest in a business or professional practice, it is presumed that a restraint of __________ or less is reasonable, while a restraint of more than __________ is presumed unreasonable.

Answer 56

6 months; 2 years

Question 57

If the ∆ is a former distributor, dealer, franchisee, or licensee of a trademark or service mark, and the case does not involve the sale of any business interests, a restraint of no more than ______ is presumed reasonable, while a restraint of more than __________ is presumed unreasonable.

Answer 57

1 year; 3 years

Question 58

If the ∆ is the seller of all or part of any business interests, a restraint of no more than ______ is presumed reasonable, while a restraint of more than ________ is presumed unreasonable.

Answer 58

3 years; 7 years

Question 59

A is hired by B as a sales representative. B gives A a confidential customer list which gives each customer’s name, when that customer usually buys and what they buy, and the name of the “contact” who makes the decision. A signs a covenant not to compete with B in a ten-county area for 15 years after leaving B’s employ. In fact, B does business in only one of the 10 counties. A leaves B’s employ. A solicits B’s customers using the customer list that A obtained from B. A also solicits new customers both in the county where B does business and also in other portions of the 10-county area. Can B obtain equitable relief?

Answer 59

Yes, but judge can reduce time or area.

Question 60

____________ is a remedy by which a voidable contract is put to an end and the parties are treated as though it had never been made.

Answer 60

Rescission

Question 61

____________ treats the contract as valid and changes a writing setting forth or implementing the agreement to conform to the originally intended agreement.

Answer 61

Reformation

Question 62

Equity will rescind a contract if at the time it was entered into there was:

Answer 62

(1) Mutual mistake as to a material fact, unless there was a compromise as to a disputed fact which proved mistaken.
(2) Misrepresentation as to a material fact (the misrepresentation would have been likely to have induced a reasonable recipient to make the contract).
(3) A unilateral mistake will not normally suffice, but may if known or should have been known to the other party or would create an undue hardship to the mistaken party.
(4) Other grounds like duress, undue influence, lack of capacity or failure of consideration will also justify rescission.

Question 63

∆, by mistake, cuts trees on π’s land. ∆ honestly believes the damage amounts to $500, while π believes the damages to be $1,000. They compromise, and ∆ agrees to pay $750. Subsequently, it develops that actual damages are $1,400. Will rescission be available?

Answer 63

No. Will enforce compromise, assumed risk & public policy = should be upheld

Question 64

Generally, negligence of the π ________ a defense to a suit for rescission.

Answer 64

Is not

Question 65

π submits a bid on ∆’s building that is in error due to π’s carelessness in failure to include an item. ∆ knew of the error. When the contract was signed, π negligently failed to read the contract. Will π’s negligence bar rescission?

Answer 65

No because ∆ knew.

Question 66

A writing may be reformed if it is incorrect as result of:

Answer 66

(1) Mutual mistake (scrivener’s error)
(2) Unilateral mistake coupled with fraud
(3) Misreprentation

Question 67

C, a construction company, promises O that any topsoil removed during construction will be replaced when construction is completed. C prepares a writing, representing to O that it contains their entire agreement. The promise concerning the replacement of the topsoil is not contained in the writing. May the writing be reformed?

Answer 67

Yes

Question 68

Difference between rescission and reformation:

Answer 68

Rescission: there is no original valid contract because of mistake, misrepresentation, or the like

Reformation: the original contract is valid, but the subsequent writing of the parties for some reason does not conform to the original contract

Question 69

A rents a summer cottage to B. Unknown to either party at the time of contracting, the cottage had burned to the ground several days earlier. Can B obtain rescission?

Answer 69

Yes because material mutual mistake.

Question 70

A rents a summer cottage to B. Unknown to B at the time of contracting, the cottage had burned to the ground several days earlier. Can B obtain rescission?

Answer 70

Yes because of misrepresentation.

Question 71

C agrees to sell D 100 acres of land. By mistake, C conveys only 90 acres by deed. Can D obtain reformation?

Answer 71

Yes because the mistake is made in the executing deed.

Question 72

S enters into a contract to sell B some land. S believes that the agreement is for 90 acres of land. B believes that he is buying 100 acres of land. S signs a deed, prepared by B, that describes 100 acres. S now seeks to have the deed reformed to show 90 acres. Is reformation available? What about rescission?

Answer 72

Reformation? No because there is too much mistake meaning no valid contract.

Rescission? Yes because it was too far off (mutual mistake)

Question 73

Defense available if π is guilty of improper conduct with respect to the same transaction involved in litigation.

Answer 73

Unclean Hands

Question 74

π enters into a scheme with ∆ to defraud π’s creditors by conveying π’s land to ∆ without receiving any consideration from ∆. Subsequently, ∆ refuses to reconvey the property to π, and π seeks equitable relief to rescind the original conveyance on the grounds of fraud. Can π obtain such relief?

Answer 74

Probably not because of motive to defraud the creditors.

Question 75

A is vile and morally reprehensible person who has engaged in a lifetime of bad activities and misconduct. A enters into a contract to pruchase B’s land for a low, but otherwise fair price. B refuses to convey the land at the time of closing, despite A’s tender of the agreed purchase price. Can A obtain specific performance of the contract?

Answer 75

Yes

Question 76

The defense of laches is available where π has delayed brining suit if:

Answer 76

(1) Delay is unreasonable based upon when π obtained knowledge of the wrong; and
(2) If delay prejudices ∆

Question 77

Assume that you accidentally pour the concrete driveway to your home so that a small strip is on my property. I seek an injunction ordering you to tear up your driveway to remove it. It hardly affects the value of my land at all. Will equitable relief be granted? Would it matter if you knew that you were pouring the driveway on a portion of my property?

Answer 77

Equitable relief probably won’t be granted.

Might matter if you knew that you were pouring the driveway on a portion of other property.

Question 78

The constitutional guarantee of ___________ may be used to prevent injunctive relief in defamation and invasion of privacy cases.

Answer 78

Free speech

Question 79

Imposes an equitable duty on a ∆ to convey property acquired under certain circumstances to the rightful owner. These circumstances include acquisition of title to property by fraud, various other wrongdoings, and mistake.

Answer 79

Constructive trust

Question 80

E, a bank employee, embezzles $10,000 from Bank and purchases some stock. The stock increases in price to a current market value of $15,000. Assuming that Bank can trace the misappropriated funds to the stock:

Answer 80

A court would require E to disgorge the profits made on the stock purchase in order to prevent unjust enrichment.

Question 81

Operates as a charge or encumbrance on property and is available where the π can trace misappropriated funds or other property to its product. The holder of this has a security interest to the extent of the benefits unjustly held by the ∆.

Answer 81

Equitable lien

Question 82

When is an Equitable Lien preferred over a Constructive Trust?

Answer 82

(1) Property declines in value;

(2) Not severable interest in ∆’s property that π can make a claim

Question 83

E embezzles $10,000 from Bank and uses this money to purchase some stock. The stock has decreased in market value to $7,000. Which is the preferred remedy?

Answer 83

Equitable lien

Question 84

E embezzles $10,000 from Bank and uses this money to purchase some stock. The stock has increased in market value to $12,000. Which is the preferred remedy?

Answer 84

Constructive trust

Question 85

Assume that E uses the $10,000 that he embezzled to make various improvements to some real property that he owns. Could Bank obtain a constructive trust on the real property? What about an equitable lien?

Answer 85

Probably could not obtain a constructive trust because property isn’t really severable.

Could probably obtain an equitable lien on the house, foreclose, or get proceeds from sale.

Question 86

Assume that E uses the $10,000 that he embezzled and, along with $5,000 of his own money, buts a diamond ring. Could Bank obtain a constructive trust on the ring? What about an equitable lien?

Answer 86

Constructive trust: No because would lose value if severed.

Equitable lien: Yes

Question 87

A person holding an equitable interest in property, such as through a constructive trust or an equitable lien, cannot enforce that interest against a third person who acquired legal title to the property ______________ and ______________________.

Answer 87

For value; without notice of the equitable interest

Question 88

B, with a “bad check,” fraudulently induces A to sell B her car. B then sells the car to C, a good faith purchaser for value. B skips town. Can A obtain a constructive trust on the car? What if B had given the car to C as a gift?

Answer 88

A cannot obtain a constructive trust.

If B had given car to C as a gift, probably could obtain constructive trust.

Question 89

2 principal general requirements for equitable relief:

Answer 89

(1) the legal remedy is inadequate

(2) equitable relief is feasible