JUNE 24

Question 1

A music promoter planned to open a discotheque and bar on the outskirts of town. He hired a builder to build it, with a completion date of September 15. Although the promoter was very optimistic that the disco would be a big success, its profitability could not be determined with certainty. First year profits were estimated to be about $1,000 per day. To encourage the builder to work in a timely manner, the contract included a liquidated damages clause, providing that the builder would pay the promoter $10,000 per day for each day the contract ran over its completion date. The builder’s work progressed smoothly and would have been finished on time, except that the builder failed to place in a timely manner his order for the disco’s specially manufactured dance floor lighting. Consequently, the work was not completed until October 15.

The promoter sued the builder for breach of contract. The builder called a witness who testified that the disco would have received $30,000 in income during that 30-day period and would have expended $20,000, leaving a profit of $10,000.

How much should the builder be required to pay to the promoter in damages?

A
$10,000, representing the disco’s lost profits.

B
$30,000, representing the disco’s lost income.

C
$300,000, representing damages provided in the contract.

D
$310,000, representing damages provided in the contract, plus lost profits.

Answer 1

CORRECT ANSWER: A.

The promoter will be able to recover $10,000, the disco’s lost profits for the 30-day period. The purpose of contract damages is to put the nonbreaching party into as good a position as he would have been in had the breaching party fully performed. This would be represented here by the disco’s lost profits, which is income ($30,000) minus expenses ($20,000), or $10,000. (B) is incorrect because giving the promoter the $30,000 income would put him in a better position than he would have been in if the builder had performed, because such an award does not take into account the expenses that were saved by the disco not being in operation. (C) is incorrect because a court would not uphold the liquidated damages clause here. A liquidated damages clause is enforceable only if damages were difficult to estimate at the time the contract was formed, and the amount agreed upon is a reasonable forecast of the damages that would result from a breach. Here, the damages may have been difficult to predict when the contract was formed because it was not known just how well a new discotheque would do; however, the amount agreed upon seems to be too high. The facts indicate that a reasonable estimate at the time of the contract was about $1,000 per day, but because the liquidated damages amount ($10,000 per day) is 10 times that amount, it seems that this amount was unreasonable. (D) is incorrect because it seeks to combine the actual damages with the liquidated damages. Even if the liquidated damages clause were enforceable, this answer would still be incorrect because a party may recover either liquidated damages, or, if not available, the actual damages, but not both.

Question 2

A contract between a camera store and a distributor of camera lenses called for the sale of 20 standard zoom lenses that would be compatible with a particular manufacturer’s film and digital cameras, for a price of $300 per lens. After an employee of the camera store with authority to accept deliveries accepted shipment of the zoom lenses, store personnel learned that the lenses would not work with the manufacturer’s film camera, but instead were compatible only with the manufacturer’s digital camera. The camera store filed suit. At trial, the store’s attorneys established that the nonconforming lenses were worth $200 per lens.

Which of the following should be the measure of damages applied to determine the camera store’s loss?

A
The cost of purchasing lenses compatible with the manufacturer’s film camera from another supplier.

B
The contract price of $6,000, because the camera store has not received the benefit of its bargain.

C
The difference between the value of the lenses as received and their value if they had been compatible with the manufacturer’s film camera—$2,000.

D
The camera store is not entitled to damages, because its employee accepted the lenses as shipped by the distributor.

Answer 2

CORRECT ANSWER: C.

The camera store’s measure of loss would be the difference between the value of the goods as received and the value they would have had if they had conformed to the contract. When goods are delivered that do not conform to the parties’ contract, the buyer has the option to accept all, reject all, or accept any commercial units and reject the rest. If the buyer chooses to accept the goods, as the camera store did here, the buyer has a right to recover damages for the nonconformity. The standard measure of damages as to accepted goods is the difference between the value of the goods as delivered and the value they would have had if they had been conforming (plus incidental and consequential damages). Here, the goods as delivered were worth $4,000 ($200 per lens for 20 lenses) and they would have been worth $6,000 ($300 per lens for 20 lenses) if they had been as the contract required. Thus, (C) is correct. (A) is incorrect because it describes the remedy of “cover,” and cover is available only when the buyer rejects the goods. (If the buyer rejects the goods, he may either cancel the contract or buy substitute goods and charge the breaching seller for the substitutes.) (B) is incorrect because the buyer is entitled to return of the entire contract price only when he cancels the contract. Otherwise, the buyer would get a windfall based on the value of the goods received. (D) is incorrect because, as indicated above, a buyer who accepts nonconforming goods is still entitled to damages.

Question 3

The proprietor of a food brokerage entered into oral negotiations with a manufacturer of gourmet food products for restaurants and select retail outlets. The proprietor wished to secure an exclusive distributorship for the manufacturer’s products in the six New England states. At the end of the first stage of oral negotiations, the parties had come to an agreement on the major points, and only a few minor points of disagreement remained. Both, however, were anxious to begin distribution of the food products in New England, and the manufacturer assured the proprietor, “Don’t worry about it; we’ll work these things out.” Assuming from this that he would be the New England distributor for the food products, the proprietor leased larger facilities, bought a number of trucks, and hired new workers. Shortly thereafter, the manufacturer informed the proprietor that another distributor, and not the proprietor, would receive the New England distributorship.

If the proprietor prevails in a suit against the manufacturer, it will most likely be because the court applies which of the following theories?

A
Implied-in-fact contract.

B
Promissory estoppel.

C
Unjust enrichment.

D
Quasi-contract.

Answer 3

CORRECT ANSWER: B. Promissory estoppel.

The doctrine of promissory estoppel under section 90 of the Restatement (Second) of Contracts provides that a promise that the promisor should reasonably expect to induce action or forbearance on the part of the promisee, and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise. When the manufacturer promised the proprietor that “we’ll work these things out,” he should have reasonably expected the proprietor to take exactly the sort of action he did to prepare for the distributorship, because the parties had already agreed on the major points of their arrangement. The manufacturer will therefore be liable for the proprietor’s detrimental reliance on a theory of promissory estoppel. (A) is incorrect because an implied-in-fact contract arises when assent is manifested by conduct, as opposed to assent by oral or written language, which gives rise to an express contract. A typical example of an implied-in-fact contract is where a customer enters a barbershop, sits in the barber’s chair, and receives a haircut from the barber without speaking a word. The circumstances imply that the customer has agreed to pay for the haircut, even though this was not discussed beforehand. There was no conduct under the facts from which assent to anything can be implied. (C) is incorrect because unjust enrichment arises in situations where there is no enforceable contract, yet one person has for some reason conferred a benefit on another with the expectation of being compensated. If the second person retains the benefit without paying for it, he will be unjustly enriched. The proprietor’s expenditures did not serve to enrich the manufacturer, so the concept of unjust enrichment does not apply. (D) is incorrect because a quasi-contract action is used to provide restitution in situations of unjust enrichment. In some cases, courts will allow a plaintiff in a quasi-contract action to recover restitution for the market value of his services even if they do not directly benefit the defendant, provided they were given with the expectation of being compensated or they benefit a third party at the request of defendant. The costs incurred by the proprietor, on the other hand, were expenditures to enable him to perform the contract that he had been promised; hence, promissory estoppel is the appropriate theory for the proprietor to use.

Question 4

A manufacturer of a very popular, artisanal red cheese enters into an agreement with a retail seller of gourmet foods. The agreement provides that the retailer will buy and the manufacturer will sell all of the red cheese that the retailer requires for two years at $500 per 10-wheel container. In the past two years, the retailer has sold 10 containers per year but estimates that it could sell twice that amount with a steady supply.

Under the above facts, what are the relative obligations of the manufacturer and the retailer?

A
The retailer must buy red cheese exclusively from the manufacturer, and the manufacturer must sell its red cheese exclusively to the retailer.

B
The retailer must buy red cheese exclusively from the manufacturer, and the manufacturer may sell its red cheese to anyone.

C
The retailer may buy red cheese in excess of 20 containers from another manufacturer, and the manufacturer may refuse to sell to retailer an amount in excess of 20 containers.

D
The retailer is not required to buy any cheese from the manufacturer if it has a good faith reason, but the manufacturer may sell its red cheese only to the retailer.

Answer 4

CORRECT ANSWER: B. The retailer must buy red cheese exclusively from the manufacturer, and the manufacturer may sell its red cheese to anyone.

B is Correct. The retailer must buy all of its red cheese from the manufacturer, and the manufacturer may sell its red cheese to anyone. Exclusivity is implied in a requirements contract; otherwise the buyer’s promise would be illusory. If the retailer were free to purchase from other suppliers, the promise would be one to buy as much as the retailer chooses. Consideration for a requirements contract exists because the promisor is suffering a legal detriment by parting with the legal right to buy goods he may need from another source. On the other side, the manufacturer has suffered legal detriment by agreeing to sell to the retailer any amount it requires at the stated price. The manufacturer has parted with any discretion in the amount sold to the retailer and its price. Therefore, there is no need to impose an exclusivity requirement on the manufacturer to establish consideration. Thus, (A) is wrong. (C) is wrong because the retailer has promised to buy all of the red cheese it requires from the manufacturer, not simply 20 containers. Likewise, the manufacturer must sell to the retailer all of the cheese it requires. The only time a variation from the contract is permitted is when a buyer demands a quantity unreasonably disproportionate to a stated estimate or any normal prior requirements. In that case, the seller may seek relief from a court. The estimate does not set the upper limit on the contract. (D) is wrong because, while it is true that a buyer with a good faith reason need not purchase anything under a requirements contract, the seller is free to sell its goods to anyone, as discussed above. Thus, the manufacturer may sell its cheese to any buyer.

Question 5

A professional wrestler entered into a written agency contract with an agent, who agreed to try to get the wrestler’s picture on a variety of food products. The wrestler promised that the agent would have the exclusive right to promote the wrestler on food product lines. They agreed that the wrestler would receive 70% of the proceeds and that the agent would receive 30%. The agent was able to persuade a breakfast cereal company to put the wrestler’s picture on their cereal boxes. Shortly after the agent confirmed the cereal deal with the cereal manufacturer, the wrestler and the agent agreed orally that henceforth the wrestler would receive 50% of the proceeds, including proceeds from the cereal deal, and the agent would receive the other 50%. The wrestler received a $10,000 check from the cereal manufacturer, and he promptly sent the agent a check for $3,000. The agent demanded an additional $2,000, but the wrestler refused to pay.

If the agent sues the wrestler for the $2,000, who will prevail?

A
The agent, because consideration is not required for a modification.

B
The wrestler, because of the parol evidence rule.

C
The wrestler, because the agent had a preexisting legal duty to secure food product promotions for the wrestler.

D
The wrestler, because an exclusive contract requires that the party given the privileges of exclusivity use his best efforts.

Answer 5

CORRECT ANSWER: C. The wrestler, because the agent had a preexisting legal duty to secure food product promotions for the wrestler.

A professional wrestler entered into a written agency contract with an agent, who agreed to try to get the wrestler’s picture on a variety of food products. The wrestler promised that the agent would have the exclusive right to promote the wrestler on food product lines. They agreed that the wrestler would receive 70% of the proceeds and that the agent would receive 30%. The agent was able to persuade a breakfast cereal company to put the wrestler’s picture on their cereal boxes. Shortly after the agent confirmed the cereal deal with the cereal manufacturer, the wrestler and the agent agreed orally that henceforth the wrestler would receive 50% of the proceeds, including proceeds from the cereal deal, and the agent would receive the other 50%. The wrestler received a $10,000 check from the cereal manufacturer, and he promptly sent the agent a check for $3,000. The agent demanded an additional $2,000, but the wrestler refused to pay.

Question 6

A pâté manufacturer entered into a written agreement with a gourmet food store. The manufacturer agreed to sell “all” its “output of liver pâté” to the store and the store agreed to sell the manufacturer’s pâté “exclusively.” The agreement between the store and the manufacturer also contained the statement, “either party may cancel this contract after two months on giving reasonable notice to the other party.” After the manufacturer filled the store’s orders for six months, the manufacturer determined that it was becoming too costly to operate and maintain the special oven used to roast the pâté loaves, and that it would be difficult and expensive to find a suitable substitute. The manufacturer, therefore, notified the store that it was getting out of the pâté business, and explained why, and that it would stop shipping pâté to the store after 60 days. The store sued the manufacturer, demanding that the manufacturer continue to ship pâté to the store or pay monetary damages.

Will the store prevail?

A
Yes, because it was not impossible for the manufacturer to perform.

B
Yes, because the manufacturer assumed the risk that making pâté would become expensive.

C
No, because the expense of fixing the oven provides a good faith reason for stopping production.

D
No, because the cancellation provision made the contract illusory.

Answer 6

CORRECT ANSWER: C. No, because the expense of fixing the oven provides a good faith reason for stopping production.

C is Correct. The extreme difficulty and expense of repairing or replacing the oven constitutes a good faith reason for the manufacturer to cancel the contract, as it is entitled to do under the contract on reasonable notice. Thus, the store will not prevail. Reservation of an unqualified right to cancel or withdraw from a contract at any time may amount to an illusory promise. However, the promise is not illusory, and there is a valid consideration, if the right to cancel is restricted in any way. Here, the right of either party to cancel is restricted because it must be preceded by reasonable notice to the other party, which was provided. Therefore, the promises are not illusory, and both parties are bound. The manufacturer finds itself confronted with circumstances that present extreme and unreasonable difficulty and expense in complying with its contractual duties of supplying pâté. While this additional test might not be sufficient to discharge the manufacturer’s duties on grounds of impracticability, it is clearly grounds for supplying the manufacturer with a good faith reason for canceling the contract. (A) is incorrect because the manufacturer is entitled to cancel the contract for a good faith reason on giving reasonable notice. It is not necessary to show impossibility. (B) is incorrect because the fact that the parties agreed to a cancellation provision indicates that the manufacturer did not assume all risks of increased expenses in making pâté. The unreasonable amount of expense and difficulty involved with the maintenance and/or replacement of the oven supports the manufacturer’s good faith decision to cancel the contract. (D) is incorrect because, while some courts have found promises to be illusory if the contract provided for an unqualified right to cancel the contract at any time, here the right to cancel is restricted by requirements of good faith reasons for cancellation as well as giving reasonable notice.

Question 7

An electrician submitted a bid for electrical work in response to a newspaper ad placed by a general contractor, who was bidding on the renovation of an office building. The electrician’s bid was the lowest and the general contractor used it to form his bid submitted to the owner of the building. The general contractor was awarded the contract, but later decided to hire another party, who had initially submitted a higher bid, to perform the electrical work.

If the electrician sues for damages, will he prevail?

A
Yes, because there was an implied acceptance that the general contractor would use the lowest bid for electrical contracting.

B
Yes, because the electrician’s bid was an offer for an option contract that was accepted on acceptance of the general contract.

C
No, because the general contractor never communicated an acceptance of the electrician’s offer.

D
No, because the general contractor’s advertisement for bids did not constitute an offer.

Answer 7

CORRECT ANSWER: C. No, because the general contractor never communicated an acceptance of the electrician’s offer.

C is Correct. The general contractor did not accept the electrician’s bid even though he used it to prepare his bid. The advertisement constituted an invitation for subcontractors to make offers. The electrician’s bid constituted an offer. The general rule is that acceptance of an offer must be communicated to the offeror, and here the general contractor did not communicate any acceptance to the electrician. Although statutes in some cases may create an exception to the general rule by making acceptance of a subcontractor bid automatic on the general contractor’s being awarded the contract, no such exception is indicated by these facts. (A) is incorrect because the facts do not reveal any basis for an inference that the general contractor would use the lowest bid. Typically, a contractor will consider other factors as well, such as reputation or past performance, in deciding which bid to accept. (B) is incorrect even though the electrician’s bid could be treated as an offer for an option contract based on promissory estoppel (detrimental reliance) principles. Here, the acceptance of the option contract to keep the bid open occurred when the general contractor relied on the bid to prepare his own bid. [See Restatement (Second) of Contracts §87] The award of the general contract had no effect on the option contract and did not create an acceptance of the offer for the electrical contract (as discussed above). (D) is incorrect, although it is factually a true statement. The general contractor’s advertisement was an invitation for offers, not an offer in itself. The offer on these facts was made by the electrician, and the reason no enforceable contract exists is that the general contractor never accepted the electrician’s offer.

Question 8

On April 1, a music store owner offered to sell a rare piano to his best customer, a concert pianist, for $100,000. The following day, the pianist, who performs around the world with two of the several pianos he has purchased from the store, wrote to the store owner: “I have decided to purchase the piano. A check for $100,000 is enclosed. I am leaving in one week for Canada. I will be gone for one month and will pick up the piano when I return. I will pay you to store the piano in your air-conditioned warehouse.” One week later, the pianist left for Canada without hearing from the music store owner.

What does the letter that the pianist wrote to the store owner constitute?

A
A conditional acceptance.

B
A rejection of the offer.

C
An acceptance, and the store owner is not bound to store the piano.

D
An acceptance, and the store owner must store the piano but is entitled to the reasonable value of that service.

Answer 8

CORRECT ANSWER: D. An acceptance, and the store owner must store the piano but is entitled to the reasonable value of that service.

The pianist’s letter to the store owner is an acceptance, and the store owner must store the piano. This is a contract for a sale of goods and thus is governed by the UCC. Under the UCC, an acceptance with additional terms does not constitute a rejection and counteroffer, but rather is an effective acceptance unless made expressly conditional on the assent to the additional terms. Here, the pianist expressly accepted the store owner’s offer and included an additional term adding one month of storage. The acceptance was not expressly conditional on the store owner’s assent to the storage term. Thus, the acceptance was sufficient to create a contract. Whether additional terms become part of the agreement depends on whether both parties are merchants. If both parties are merchants, the additional terms become part of the contract unless they materially alter the terms of the offer, the offer expressly limited the acceptance to its terms, or they are objected to within a reasonable time. A “merchant” is one who regularly deals in goods of the kind sold or who otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved. For purposes of the UCC battle of the forms provisions, a merchant is almost anyone in business because anyone in business has knowledge of business practices. Here, the store owner is clearly a merchant. The pianist, by virtue of his occupation, has knowledge or skill peculiar to the goods (piano) involved. He plays the piano professionally and has purchased several pianos for this purpose. The additional term included in the pianist’s acceptance did not materially alter the terms of the offer (i.e., it did not change a party’s risk or remedies), the offer was not limited to its terms, and the facts indicate that the store owner did not object. Thus, the additional term regarding storage becomes part of the agreement. (A) is incorrect because the pianist did not make the acceptance conditional on the owner’s assent to the additional term. (B) is incorrect because, unlike at common law, under the UCC, an acceptance that contains additional terms (i.e., one that is not a mirror image of the offer) is not a rejection and counteroffer. (C) would be the correct answer if the pianist were not a merchant. If one of the parties to a contract is not a merchant, any additional terms in the acceptance will be ignored unless specifically accepted.

Question 9

Several years ago, a lender lent a borrower $1,000, and the parties agreed in writing that the borrower would repay the lender within one year. The borrower failed to repay the lender, but the lender took no action prior to the expiration of the five-year statute of limitations on suits for debt. Some time after that, the lender phoned the borrower and told him, “If you’ll pay me $600 now, I’ll forget all about that unpaid $1,000 debt.” The borrower agreed orally and then sent the lender a signed letter, which stated, “I, the borrower, agree to pay the lender $600.” The borrower never paid the lender the $600 and the lender sued the borrower shortly thereafter.

What is the lender entitled to recover?

A
$1,000, because the agreement by the borrower to pay the lender $600 revived the original $1,000 obligation.

B
$600, because the borrower’s moral obligation to pay the lender $1,000 became the consideration for the borrower’s agreement to pay the lender $600.

C
Nothing, because the statute of limitations has run.

D
Nothing, because no additional consideration was provided to support the borrower’s agreement to pay the lender $600.

Answer 9

CORRECT ANSWER: B.

B is Correct. The lender is entitled to recover $600. When a past obligation would be enforceable except for a technical defense to enforcement, a new promise in writing will be enforceable even in the absence of any new consideration. As a general rule, a contract requires a bargained-for exchange between the parties as consideration; “past” or “moral” consideration is usually insufficient. Among the many exceptions to this rule is where a technical defense such as the statute of limitations bars enforcement of the prior obligation and a new promise is made in writing. In such a case, courts will state that the “moral” consideration is sufficient consideration for the new agreement, or that the existence of the prior obligation is a substitute for consideration. Regardless of how the courts characterize it, the new promise will be enforceable only according to its terms, not the terms of the original obligation. Hence, the lender is entitled to recover $600 on the basis of the borrower’s signed letter promising to pay that amount. (A) is incorrect because the new agreement has no effect on the original obligation. The new agreement is what is being enforced, not the original obligation. Had the borrower instead promised to pay “the debt I owed to the lender,” the new agreement would be enforceable for $1,000. (C) is incorrect because the statute of limitations just bars the judicial remedies for enforcing the prior agreement; it does not nullify the agreement. Hence, the prior agreement may serve as a substitute for consideration if a new agreement is made. (D) is incorrect because, as discussed above, no additional consideration is needed for the agreement to pay $600.

Question 10

In July of last summer a grape grower contracted with a winery to deliver “500 tons of premium quality pinot chardonnay grapes grown on my ranch.” The price was to be $1,000 per ton and delivery was to be on or before September 15. In August of the same year, the grape grower entered into an identical contract with a vineyard to sell 300 tons of premium quality pinot chardonnay grapes.

The grape grower completed his harvest by September 10 and had 800 tons of premium quality grapes. On September 11, an unexpected rain ruined 400 tons, and the grape grower notified the winery and the vineyard on that day that he would only be able to deliver 250 tons to the winery and 150 tons to the vineyard. On September 14, the vineyard purchased an additional 150 tons of premium quality pinot chardonnay grapes from a different grape farmer, one of several other available sources for premium quality pinot chardonnay grapes. These grapes along with the 150 tons from the grape grower gave the vineyard the 300 tons it needed.

On September 15, what is the winery’s legal position with regard to the grape grower’s failure to deliver the 500 tons of grapes required by his contract?

Question ID: MK045

A
If the winery has given the grape grower a written notice of termination, the winery will have the right to refuse to accept the 250 tons of grapes but will have no cause of action for damages against the grape grower.

B
Even if the winery has given the grape grower a written notice of termination, the winery must accept the 250 tons of grapes and will have no cause of action for damages against the grape grower.

C
Because the vineyard’s purchase establishes that it is possible for the grape grower to perform by obtaining additional grapes from other available sources, the winery may accept the 250 tons from the grape grower and recover damages for the grape grower’s failure to deliver the balance of the amount specified by the contract.

D
Because the grape grower’s contract with the winery was entered into before his contract with the vineyard, the grape grower is bound to deliver the entirety of his grape crop to the winery.

Answer 10

CORRECT ANSWER: A.

A is Correct. The winery may refuse the shipment if notice of termination is given but will not recover damages for breach. This problem is governed by UCC sections 2-613, 2-615 and 2-616. When crops are destroyed in the case of a farmer who has contracted to sell crops from a designated tract of land, the loss may be governed either by UCC section 2-613 (casualty to identified goods) or section 2-615 (failure of presupposed conditions/commercial impracticability). The result is the same under either section. Under section 2-613, if goods identified when the contract is made suffer casualty without fault of either party before the risk of loss passes to the buyer, the contract may be avoided. If the loss is partial, the buyer may treat the contract as avoided or accept the goods with allowance from the price for the deficiency. The buyer does not have any further rights against the seller and thus cannot sue the seller for breach. Under section 2-615, a crop failure resulting from an unexpected cause excuses a farmer’s obligation to deliver the full amount as long as he makes a fair and reasonable allocation among his buyers. The grape grower has done this by allocating pro rata between the winery and the vineyard. Nevertheless, under UCC section 2-616, the buyer may either accept the proposed modification or terminate the contract. Under either provision, the winery is free to reject the 250 tons of grapes. Thus, (B) is wrong. (C) is wrong because even though alternative sources are available, the grape grower is not obligated to use them because the contract was tied to a designated parcel of land—“my [the grape grower’s] ranch.” (D) is wrong because it is contrary to the provision of UCC section 2-615, which permits the farmer to make an allocation.

Question 11

A landowner and his friend owned a tract of land as joint tenants with right of survivorship. The landowner executed a deed conveying his interest in the land to his grandson. The landowner gave the deed to his attorney with instructions to deliver it to the grandson upon the landowner’s death. The grandson first learned of the deed at the landowner’s funeral the following year. The next day, the grandson recorded the deed.

Who owns the land?

A
The friend and the grandson, as joint tenants.

B
The friend and the grandson, as tenants in common.

C
The friend.

D
The grandson.

Answer 11

CORRECT ANSWER: C. The friend

C is Correct. The friend owns the land. A joint tenancy is a concurrent estate in land in which each co-tenant has an undivided right in the property and a right of survivorship—when one joint tenant dies, the property is freed of his concurrent interest and the survivor retains an undivided right in the property that is no longer subject to the interest of the deceased co-tenant. An inter vivos conveyance by one joint tenant, even a “secret” deed that is to take effect only upon the grantor’s death, severs a joint tenancy. However, although acceptance (presumed or otherwise) usually “relates back” to the date of delivery of the deed in escrow, many courts refuse to relate back an acceptance where it would defeat the rights of intervening third parties, such as surviving joint tenants. Thus, the grantee’s acceptance of the deed after the grantor’s death does not relate back to defeat the right of survivorship. Here, the grandson did not accept the deed until after the landowner’s death. In the meantime and because of that death, the friend’s right to the whole property had accrued to her as the surviving joint tenant. Thus, the grandson has no interest in the land, and (A), (B), and (D) are incorrect. Note that if the landowner’s conveyance had been effective, (B) rather than (A) would have been the correct answer. Upon severance of a joint tenancy by inter vivos conveyance, the new tenant holds as a tenant in common with the remaining joint tenant, and not as a joint tenant.

Question 12

A landlord who owned a strip mall entered into a written five-year lease of one of the units with a discount retail perfumery. The lease provided for a monthly rent of $1,000, payable on or before the first day of each month. The perfumery dutifully paid its rent on time for two years and three months. At that time, with the oral permission of the landlord, the perfumery transferred its interest in the remainder of the lease to a dry cleaner in writing, and added a clause requiring the dry cleaner to get permission from the perfumery for any subsequent assignments. The dry cleaner promptly paid rent to the landlord for 14 months, and then asked the landlord to approve a transfer of its interest in the lease to a video rental store. The landlord gave her oral assent. To obtain the perfumery’s approval of the transfer to the video store, the dry cleaner wrote a letter to the perfumery, promising that if any problems arose and anyone tried to go after the perfumery for money, the dry cleaner would “make it good.”

After the perfumery sent a letter back to the dry cleaner agreeing to the transfer, the dry cleaner executed a written transfer of its interest to the video store. The video store promptly paid rent for three months. Having failed to make any profits, the video store ceased paying any rent to the landlord and cannot be located. The landlord has been unable to find anyone interested in the unit.

Given that any judgment against the video store would be worthless, from whom can the landlord collect the unpaid rent owed on the lease?

A
Either the perfumery or the dry cleaner.

B
The perfumery only, but the perfumery may recover in turn from the dry cleaner.

C
The perfumery only, and the perfumery has no recourse against the dry cleaner.

D
Neither the perfumery nor the dry cleaner.

Answer 12

CORRECT ANSWER: A.

The landlord may collect the unpaid rent from either the perfumery or the dry cleaner. A complete transfer of the tenant’s entire remaining term is an assignment of the lease. However, the original tenant can still be held liable on his original contractual obligation in the lease to pay rent; i.e., on privity of contract. (D) is therefore incorrect because the perfumery is liable for the rent. (B) and (C) are also incorrect. Because the covenant to pay rent touches and concerns, and hence runs with the tenant’s leasehold estate, an assignee owes the rent directly to the landlord. If the assignee reassigns the leasehold interest, his privity of estate with the landlord ends, and he generally is not liable for the subsequent assignee’s failure to pay rent in the absence of a specific promise to the landlord. However, even if the assignee made no promise to the landlord but did promise the original tenant that he would pay all future rent, the landlord may sue the assignee as a third-party beneficiary of the promise to the original tenant. Here, while the dry cleaner made no promise to the landlord, the dry cleaner did make a promise to the perfumery regarding the obligation that the perfumery owed to the landlord.

Question 13

A landlord leased residential property to a tenant. The written lease was for a period of one year, with the monthly rent of $1,000 payable on or before the first of each month. The termination date set out in the lease was October 1. On August 10 of the first year of her tenancy, the tenant received a letter from the landlord along with a new lease form. The lease was for a period to terminate on October 1 of the following year, and the rent stated in the new lease was $1,200 per month. Both the rent increase and the notice given were in full compliance with relevant state statutes. An accompanying letter, signed by the landlord, asked the tenant to sign the lease on the line marked “tenant.” On September 15, the tenant sent the lease back to the landlord unsigned. On September 20, the tenant sent a letter to the landlord by certified mail. The landlord signed the return receipt, which the post office duly sent to the tenant. Enclosed with the tenant’s letter was a check for $1,000 for “next month’s rent.” The landlord deposited the check into his bank account. With the landlord’s acquiescence, the tenant remained in possession after October 1.

Which of the following statements is most accurate?

A
The tenant has a month-to-month tenancy at $1,000 monthly rent.

B
The tenant has a month-to-month tenancy at $1,200 monthly rent.

C
The tenant has an annual tenancy at $1,200 per month rent.

D
The tenant has a tenancy at will.

Answer 13

ANSWER: B.

The tenant has a month-to-month tenancy at $1,200 per month. When a tenant continues in possession after termination of her right to possession, the landlord may bind the tenant to a new periodic tenancy. While the terms and conditions of the expired tenancy generally apply to the new tenancy, if the landlord notifies the tenant before termination that occupancy after the termination date will be at an increased rent, the tenant will be held to have acquiesced to the new terms if she does not surrender. This is so even if the tenant objects to the increased rent, as long as the rent increase is reasonable. (A) is therefore incorrect. (C) is also incorrect. In commercial leases, where the original lease term was for a year or more, a year-to-year tenancy results from holding over. In residential leases, however, most courts would rule that the tenant is a month-to-month tenant, irrespective of the term of the original lease. Hence, the tenancy would be month-to-month rather than annual. (D) is incorrect because a tenancy at will generally arises from a specific understanding between the parties that either party may terminate the tenancy at any time. Unless the parties expressly agree to a tenancy at will, the payment of regular rent will cause a court to treat the tenancy as a periodic tenancy.

Question 14

A property owner died and, by will, left her farm to her son and two daughters as tenants in common. At the owner’s death, the farm was encumbered by a mortgage given by the owner to a neighbor in exchange for a $20,000 loan. The property owner had not made the mortgage payments in some time, and the neighbor properly foreclosed the mortgage shortly after the owner’s death. At the foreclosure sale, the son purchased the property for $15,000.

What is the nature of the son’s interest in the farm?

A
The son is the sole owner of the farm, without further obligation to his co-tenants.

B
The three children own the farm as tenants in common, and the son succeeds to the neighbor’s position as mortgagee.

C
The son owns the farm, but the daughters may reacquire their interests by paying the son $5,000 each.

D
The son holds the farm on a resulting trust for himself and the daughters.

Answer 14

CORRECT ANSWER: C.

Answer C is correct. The son owns the farm, but the daughters may reacquire their interests. A confidential relationship exists among co-tenants. Accordingly, the acquisition by one co-tenant of any outstanding title or lien that might affect the estate held by all the co-tenants is deemed to be an acquisition on behalf of all the other co-tenants as well. Thus, when one co-tenant purchases or otherwise acquires a lienholder’s (mortgagee’s) claim against the co-tenancy property, she must give the other co-tenants a reasonable time to pay their share and acquire a proportionate interest. Answer A is incorrect. A fiduciary relationship exists among co-tenants. A co-tenant cannot profit at the expense of his co-tenants if they are willing to share the expenses. Therefore, the son owns the farm, but the daughters would be able to obtain their undivided interest in the property by paying the son their pro rata share of what he paid at foreclosure. Answer B is incorrect. Although a co-tenant cannot profit at the expense of his co-tenants, the appropriate remedy is not to leave the son as the sole mortgagee, because that remedy would not require the daughters to contribute their pro rata share toward paying off the mortgage. Even though the son was under a fiduciary duty to his co-tenants when he purchased the property, his co-tenants would not be entitled to their undivided interest in the property unless and until they paid their pro rata share of the mortgage foreclosure bid. The son is under no obligation to advance funds for his co-tenants. Answer D is incorrect. A resulting trust applies only when one person gives another the consideration to purchase property, and there is no indication that a gift was intended. The person taking title then holds the property as trustee for the person furnishing the consideration. No resulting trust is present here, because the son bought the property with his own funds.

Question 15

A landowner owned a 100-acre parcel of land near a nuclear power plant. The landowner sold a 10-acre strip of land, located in the middle of the larger parcel, to the electric company that owns the plant, so the electric company could erect a transmission line across the larger parcel. The deed contained the following language: “To the electric company, its successors and assigns, as long as the premises are used for the transmission of electricity.”

Subsequently, a regulatory commission discovered serious deterioration of the plant during a routine inspection. The commission ordered the plant closed permanently. The transmission lines from the plant were dismantled. Because there was a substantial amount of radioactive waste stored on the site, the state took all land within one-half mile of the plant site, including the 10-acre strip, by eminent domain.

Is the electric company entitled to any compensation for the taking of any interest it has in the 10-acre strip?

A
No, because the landowner’s possibility of reverter is possessory.

B
No, because an easement holder is not entitled to compensation in an eminent domain proceeding.

C
Yes, because the electric company may again use the premises for electrical transmission purposes.

D
Yes, because the holder of an easement is entitled to compensation for the value of the lost easement right.

Answer 15

CORRECT ANSWER: A.

Answer A is correct. No, the electric company is not entitled to compensation because the landowner’s possibility of reverter is possessory. The interest held by the electric company was a fee simple determinable. The permanent closing of the plant and the removal of the transmission lines caused the landowner’s possibility of reverter to become possessory. Therefore, the electric company has no estate and no compensable interest. The landowner is now the owner of the property and entitled to the compensation from the state. Answer B is incorrect. An easement gives the holder of the easement the right to use the land but no right to possession or enjoyment of the land. The facts specifically state that the property was “sold” to the electric company. Since the grant was not drafted in terms of mere use of the property, the electric company obtained a fee simple determinable interest in the property, not an easement interest. Moreover, this choice is incorrect because as a matter of law, an easement holder is entitled to compensation if there is a taking of the property by eminent domain. Answer C is incorrect. The language of the condition clearly implies a reasonable continuity of use of the property for electric transmission purposes. The permanent closing of the plant and the removal of the transmission lines caused the landowner’s possibility of reverter to become possessory. Therefore, the electric company has no estate and no compensable interest. The landowner is now the owner of the property and entitled to the compensation from the state. Answer D is incorrect. The facts specifically state that the property was “sold” to the electric company. Since the grant was not drafted in terms of mere use of the property, the electric company obtained a fee simple determinable interest in the property, not an easement interest.

Question 16

An investor owned a large tract of land. To the east of the land was a city-owned parking lot. The investor used a driveway across the eastern part of the land to provide the western part with access to the parking lot. Subsequently, the investor sold the western parcel to a bakery and the eastern parcel to a coffee shop. By a written instrument, the coffee shop granted the bakery and its customers the right to use the driveway to access the parking lot. The only other way to enter the parking lot is over land to the north of the western parcel. The bakery has been unsuccessful in obtaining access to the parking lot over this land.

The bakery’s right to use the driveway is:

A
An easement in gross.

B
An easement appurtenant.

C
An easement by necessity.

D
An easement by implied reservation.

Answer 16

CORRECT ANSWER: B. An easement appurtenant.

B is Correct. The bakery’s right to use the driveway is an easement appurtenant. An easement is deemed appurtenant when the right of special use benefits the holder of the easement in its physical use or enjoyment of another tract of land. For an easement appurtenant to exist, there must be two tracts of land: the dominant tenement has the benefit of the easement, and the servient tenement is subject to the easement right. Here, the bakery’s easement is appurtenant because its use and enjoyment of the western parcel is benefited by the right to use the driveway; thus, the easement is appurtenant. (A) is incorrect because an easement in gross is acquired independent of the ownership and enjoyment of another tract of land; there is no dominant tenement. (C) and (D) are incorrect because the bakery’s easement is in writing and is therefore express rather than implied. An easement by necessity is created by implied grant or reservation when the owner of a tract of land sells a part of the tract and by this division deprives one lot of access to a public road or utility line. An easement implied from an existing use (quasi-easement) exists if, prior to the time a tract is divided, a use exists on the “servient part” that is reasonably necessary for the enjoyment of the “dominant part” and the parties intended the use to continue after division of the property. Here, although the western and eastern parcels were once a unified tract of land, there is no need to resort to an implied easement because the coffee shop expressly granted the bakery an easement in the driveway.

Question 17

A landowner and his neighbor own adjoining properties. The landowner decided to build an addition on his home. Prior to construction of the addition, surface waters flowed across the neighbor’s property to the landowner’s property and then to a drainage ditch. After the addition was completed, surface waters no longer flowed to the ditch but accumulated on the neighbor’s property. The standing water attracted so many mosquitoes that the neighbor was unable to enjoy her backyard.

If the neighbor prevails in a lawsuit against the landowner, it will most likely be because the jurisdiction follows which legal doctrine?

A
Riparian doctrine.

B
Prior appropriation doctrine.

C
Common enemy theory.

D
Natural flow theory.

Answer 17

CORRECT ANSWER: D. Natural flow theory.

If the neighbor prevails, it will be because the jurisdiction follows the natural flow theory. Under the natural flow theory, a landowner cannot alter the rate or manner of natural flow of surface waters (e.g., rainfall, melting snow) where such actions would injure others above or below him. Here, the landowner’s addition caused the surface waters to stop flowing over his land to the ditch and instead to accumulate on the neighbor’s land. Therefore, under the natural flow theory, the landowner would be liable. (A) and (B) are incorrect because the riparian and prior appropriation doctrines apply to watercourses (e.g., rivers, lakes), not surface waters. Under the riparian doctrine, owners of land bordering watercourses have riparian rights to use the water; their rights depend on the theory (natural flow or reasonable use) followed by the jurisdiction. Under the prior appropriation doctrine, landowners may acquire the right to divert and use water even though their property might not abut to a watercourse. (C) is incorrect because under the common enemy theory, surface water is a common enemy and any owner can change its course to get rid of it. Thus, the landowner would prevail under this theory.

Question 18

A developer owned a 240-acre parcel of land zoned for commercial and residential use. He prepared and recorded, after obtaining approval from all appropriate agencies, a subdivision plan that included a commercial center and a number of lots for single- and multi-family residences. The list of covenants, conditions, and restrictions recorded with the plan included provisions that required every building constructed in the subdivision to be of “simulated adobe style” architecture approved in advance by an association. A year later, the developer sold many of the lots in the commercial center, including several to a real estate firm. Each deed prepared by the developer contained a reference to the design restriction in the recorded plan. The developer also sold almost all of the residential lots, the deeds of which contained the same reference to the restriction. The following year, the real estate firm sold one of its lots to a burger franchise. The deed contained no reference to the design restriction. The franchise’s prefabricated restaurant, complete with a giant burger logo mounted on the roof, was constructed over the weekend.

A merchant, an original purchaser of one of the commercial lots, owned the lot next to the burger franchise. She did not learn of construction of the restaurant until she came in to work on Monday, and saw the giant burger logo. The merchant brings an action seeking a mandatory injunction compelling the burger franchise to demolish the restaurant. At trial, the merchant proves that the burger franchise did not seek or obtain approval of the association for its building.

Should the court issue the injunction?

A
No, because destruction of the restaurant would be a tremendous waste of resources.

B
No, because the burger franchise’s deed contained no restriction on the type of building that could be constructed on the lot.

C
Yes, because the restrictive covenant runs with the land.

D
Yes, unless the burger franchise can establish to the court’s satisfaction that its restaurant design has at least as much aesthetic merit as any “simulated adobe style” design.

Answer 18

CORRECT ANSWER: C. Yes, because the restrictive covenant runs with the land.

The court should issue the injunction because the covenant runs with the land. A covenant will be enforceable as an equitable servitude—allowing a covenantee, covenantor, or successor to enforce the covenant in equity by way of injunction—when there is (i) a covenant in a writing satisfying the Statute of Frauds, that (ii) touches and concerns the land (i.e., the effect of the covenant makes the land more useful or valuable to the benefited party) and that (iii) indicates an intention that the servitude exists, and (iv) notice is given to future owners of the burdened land. Here, the covenant was in writing in the subdivision plan and presumably it satisfied the Statute of Frauds. It touches and concerns the land—benefiting all of the lots and burdening all of the lots. The intention to create the servitude is established by the writing and can also be implied from the common scheme for development. There was sufficient record notice of the covenant because the plan was recorded and was noted in all of the original deeds prepared by the developer, including the one in the burger franchise’s chain of title. Thus, the covenant is enforceable and (C) is the best answer. (A) is incorrect because although an injunction is equitable in nature—so equitable principles govern—it is not a defense in equity merely to claim that granting an injunction will result in a waste of assets. (B) is incorrect because the burger franchise had record notice of the restriction. The deed from the developer to the real estate firm, which contained a reference to the restriction in the recorded plan, was in the burger franchise’s direct chain of title and could have been discovered by it. (D) is incorrect because a court will not modify the covenant—it will enforce it or not enforce it, but will not substitute its judgment of what is aesthetically pleasing for the requirements of the covenant.

Question 19

A developer prepared and duly recorded a subdivision plan, dividing his 200-acre tract of land into 80 two-acre lots with a 40-acre tract in the center designated “future public golf course.” He began to market the 80 two-acre lots by preparing and distributing a brochure promoting the subdivision. The developer sold 70 of the lots to individual purchasers. Each deed referred to the recorded plan. Years later, wishing to rid himself of the remaining acreage, the developer sold the remaining 20 acres and the 40-acre tract to an investor by a deed that referred to the plan. The investor sold the 10 two-acre lots to individual purchasers and the 40-acre tract to a partnership. None of the deeds from the investor referred to the plan. The partnership has announced its intention of erecting a shopping mall on the 40-acre tract. A golfer, an owner of a two-acre lot purchased from the developer, brings suit to enjoin the partnership.

If the golfer wins, it will be because:

A
The partnership will be deemed to have taken with actual notice because of the location of the 40-acre tract.

B
The golfer can sue in equity to enforce the plan against the partnership.

C
The golfer is a creditor-beneficiary of the developer’s promise with respect to the 40-acre tract.

D
The golfer would be economically benefited by the existence of a golf course within the development.

Answer 19

CORRECT ANSWER: B.

The golfer can enjoin the partnership’s actions only if she has an equitable servitude. An equitable servitude is a covenant that, regardless of whether it runs with the land at law, equity will enforce against successors of the burdened land unless the successor is a bona fide purchaser (meaning, a subsequent purchaser for value without notice of the covenant). The requisite notice may be acquired through actual notice (direct knowledge of the covenants in the prior deeds), inquiry notice (the neighborhood appears to conform to common restrictions), or record notice (if the prior deeds are in the grantee’s chain of title it will, under the recording acts, have constructive notice of their contents). Here, the golfer will be able to enforce the restriction as an equitable servitude because the partnership has record notice of it: a deed in its chain of title referred to the recorded plan that designated the 40-acre tract as a golf course. (A) is wrong because the location of the 40-acre tract will not be sufficient to establish actual notice. However, as explained above, the partnership has record notice of the restriction. (C) is wrong because the golfer is not a third-party beneficiary of the developer’s promise. Instead, she is a direct promisee because she dealt directly with the developer. (D) is not sufficient to grant the golfer an injunction against the partnership.

Question 20

A developer owned a large urban property, which she subdivided into 10 lots. The developer conveyed Lot 1 to an architect by a deed that contained a restriction banning commercial use of the property. The developer subsequently conveyed Lots 2 through 7 to six separate purchasers. Each of the deeds to these purchasers also contained the restriction on commercial use. The architect left Lot 1 undeveloped, but the purchasers of Lots 2 through 7 all used their lots for commercial purposes. The developer subsequently conveyed Lot 8 to a florist. The florist’s deed contained the restriction banning commercial use of the lot, but he decided that he wished to use Lot 8 commercially. The developer retains ownership of Lots 9 and 10. The florist wants to bring suit to establish his rights to use Lot 8 for commercial purposes.

Which of the following best describes the parties the florist should join in his lawsuit?

A
The developer only.

B
The developer and the architect only.

C
The other commercial users only.

D
All landowners in the subdivision.

Answer 20

CORRECT ANSWER: D.

The florist should join all of the landowners in the subdivision in a suit to terminate the servitude on the grounds of abandonment. If a covenant in a subdivision deed is silent as to who holds its benefit, any neighbor in the subdivision will be entitled to enforce the covenant if a general scheme or plan is found to have existed at the time she purchased her lot. In addition, a prior purchaser can enforce a restriction in a subsequent deed from a common grantor under either a third-party beneficiary theory or an implied reciprocal servitude theory. Under the implied reciprocal servitude theory, an implied reciprocal servitude attaches to the grantor’s retained land at the moment she deeds a lot with the restriction. Thus, all of the other landowners in the subdivision could potentially enforce the covenant as an equitable servitude against the florist. All parties would probably fail in an attempt to enforce the servitude, but the florist should join them now to avoid multiple litigation. (Note that had the other landowners tried to enforce the equitable servitude against the florist, they would all have been subject to the equitable defense of acquiescence, which provides that if a benefited party acquiesces in a violation of the servitude by one burdened party, he may be deemed to have abandoned the servitude as to other burdened parties. In addition, the other commercial users are subject to the defense of unclean hands. It is important to remember that these are defenses and do not terminate the servitude; therefore, it would be best for the florist to join all possible complainants in a suit to have the servitude declared extinguished.) (A) is wrong because, as explained, the other landowners also could try to enforce the covenant. (B) is wrong for the same reason. Although the architect has not violated the covenant and thus is not subject to the defenses possible against the other landowners, he and the developer are not the only possible plaintiffs (remember the question in effect asks who can bring suit, not who can win it). (C) is wrong because the developer and the architect can also bring suit. (Note that the above discussion applies only to sparing the florist from the enforcement of the restriction as an equitable servitude. The developer may try to enforce the restriction as a real covenant. She will, however, be limited to recovering damages, which might be very difficult to prove under the circumstances.)

Question 21

A developer divided his tract of land into four standard lots, which he conveyed to a doctor, a pilot, a carpenter, and an athlete, respectively. Each deed granted by the developer contained a covenant requiring that the property be used only for single-family housing. All deeds were duly recorded in the office of the county recorder of deeds. The doctor and the pilot proceeded to build single-family houses on their lots. The carpenter and the athlete did not develop their properties immediately.

The doctor later sold her property to a nurse and included the covenant limiting use to single-family dwellings in the deed. The pilot sold his property to a flight attendant, but did not include the covenant in the deed. The carpenter sold her property to an electrician, and the deed contained the restriction. The athlete sold his property to a physical therapist, and the deed did not contain the restriction. All but the electrician’s deed were duly recorded.

Subsequently, the nurse died and her property passed by will to her daughter. The flight attendant gave her land to her son “for life.” The electrician sold his property for value to a plumber. All three transfers of title were recorded, but none of the deeds mentioned the covenant.

Which of the current owners below is not bound by the covenant?

A
The nurse’s daughter, who received the property by will.

B
The flight attendant’s son, who received the property for life.

C
The plumber, who purchased the property from the electrician.

D
The physical therapist, who purchased the property from the athlete.

Answer 21

CORRECT ANSWER: B. The flight attendant’s son, who received the property for life.

B is Correct. The covenant may not be enforced at law against the son. If all requirements are met for the burden of a covenant to run, the successors in interest to the burdened estates will be bound by the arrangement entered into by their predecessors as effectively as if they had expressly agreed to be bound. The requirements are: (i) The covenanting parties must have intended that successors in interest to the covenantor be bound by the terms of the covenant. The requisite intent may be inferred from circumstances surrounding creation of the covenant. This requirement is satisfied because the developer’s deed to each of the grantees contained a covenant requiring that the property be used only for single-family housing. (ii) By virtue of the recording statutes, a subsequent purchaser of the promisor’s land must have actual, inquiry, or constructive (record) notice of the arrangement at the time she purchased the land; otherwise, she is not bound. Here, the daughter, the son, and the physical therapist have at least constructive notice of the restriction because it is in their chain of title. Because the electrician’s deed was never recorded, the plumber had a duty to inquire of the electrician where he obtained the property. Thus, the notice requirement is met. (iii) The covenant must “touch and concern” the land; i.e., the performance of the burden must diminish the landowner’s rights, privileges, and powers in connection with her enjoyment of the land. The current owners’ rights as landowners are diminished because they cannot use their land to construct multifamily dwellings. (iv) Finally, there must be horizontal and vertical privity. Horizontal privity requires that, at the time the promisor entered into the covenant with the promisee, the two shared some interest in the land independent of the covenant. The developer and each of the four original owners, as grantor and grantees, shared an interest in the land independent of the covenant. Vertical privity exists when the successor in interest to the covenanting party holds the entire interest that was held by the covenantor at the time she made the covenant. Here, the daughter, the plumber, and the physical therapist took the entire interest (fee simple absolute) from their predecessors. However, the son possesses only a life estate in the property, which is less than the fee simple absolute held by the flight attendant. Thus, vertical privity is lacking and the son cannot be bound by the covenant. (A) is incorrect because the daughter is bound by the covenant as discussed above. The fact that she took the property by will is irrelevant. In fact, taking in this manner increases the chance that the daughter will be bound because it means she is not a bona fide purchaser for value and thus not protected by the notice requirement of the recording act. (C) is incorrect because the plumber also is bound because he is charged with inquiry notice of the electrician’s unrecorded deed, which contained the single-family restriction. (D) is incorrect because even though the physical therapist’s deed did not contain the restriction, she will be charged with constructive notice of it. The restriction appears in the developer’s deed to the athlete and thus is in the physical therapist’s chain of title. Hence, she also is bound by the covenant.

Question 22

Thirty years ago, a power company constructed a power dam on a river. At the time the dam was constructed, the power company solicited and received express easements from all of the landowners in the river valley, including a farmer. The power company paid fair value for the easements, which would allow the company to release water from the dam at certain times of the year, resulting in flooding of the land in the river valley.

In the 30 years since the dam was constructed, the farmer’s property has never been flooded, and the farmer has been using his land in the same way as he did 30 years ago. Now, however, the power company wants to substantially increase power production from the dam. All landowners in the valley were notified by the company that henceforth all 200,000 acres (including the farmer’s 200 acres) would be flooded in accordance with the company’s rights under the easement. The farmer reviewed the easement for his property and discovered that it lacked the requisite grantor’s acknowledgment and thus was improperly recorded. The state’s adverse possession statute requires hostile occupation for a period of 20 years.

May the power company properly flood the farmer’s land under the terms of the easement?

A
Yes, because such flooding is within the terms of the easement.

B
No, because the state’s adverse possession statute requires hostile occupation for a period of only 20 years.

C
No, because the company has failed to exercise its rights under the easement for 30 years, and the easement has lapsed.

D
No, because the easement was not properly acknowledged and recorded.

Answer 22

CORRECT ANSWER: A. Yes, because such flooding is within the terms of the easement.

The power company received an express easement entitling it to flood the farmer’s property. To create an easement by express grant, there must be a writing signed by the grantor. If validly created, an easement is presumed to be of perpetual duration. No facts suggest that this easement was impliedly created or prematurely terminated. (B) is incorrect because the requirements for extinguishing an easement by adverse use for the prescriptive period have not been fulfilled. To extinguish an easement by prescription, the owner of the servient tenement must so interfere with the easement as to create a cause of action in favor of the easement holder. The interference must be open, notorious, continuous, and nonpermissive for the prescriptive period. The farmer has done nothing (such as using his land in a different manner) that would indicate an interference with the power company’s easement so as to give rise to a cause of action in favor of the company. (C) is incorrect because mere nonuse will not terminate an easement. To terminate an easement, the nonuse must rise to the level of abandonment, which requires physical action by the easement holder that manifests an intention to permanently abandon (e.g., construction of a structure on the easement holder’s property that would make it impossible to use the easement). The power company has taken no physical action that could be characterized as an abandonment of the easement. (D) is incorrect because improper recordation does not affect the rights of the original parties to the transaction. To be properly recorded, an instrument generally must be acknowledged before a notary public. Although an unacknowledged instrument does not impart constructive notice to subsequent purchasers, it has absolutely no effect on the validity of the easement as between the original parties.

Question 23

After an altercation on the practice field between a freshman and a senior on a college football team, the senior came up behind the freshman in the locker room and shoved him in the back. When the freshman turned around, the senior punched him in the face. Before the freshman could retaliate, the two were quickly separated by other players. The senior taunted him, “The next time I see you I won’t go so easy on you.” That night the freshman was at a bar frequented by the football players and became enraged when some of them teased him about the altercation. He then saw the senior enter the room but kept his back to him. Suddenly he felt someone shove him in the back. Pulling out his pocketknife, he whirled and stabbed the person behind him, believing it to be the senior. In fact, it was an intoxicated patron who had stumbled and fallen into the freshman. The knife severed a major artery, and the patron died on the way to the hospital.

The freshman is charged with murder for the patron’s death. At trial, the freshman testified that he honestly believed that the senior was going to kill him the next time he saw him. On cross-examination, he admitted that such a belief was unreasonable. The freshman’s attorney requests the judge to instruct the jury on voluntary manslaughter, both on an “imperfect self-defense” theory and on a “heat of passion” basis.

How should the judge respond?

A
The judge should give both an “imperfect self-defense” instruction and the “heat of passion” instruction.

B
The judge should give the “imperfect self-defense” instruction, but not the “heat of passion” instruction.

C
The judge should give the “heat of passion” instruction, but not the “imperfect self-defense” instruction.

D
The judge should refuse to give both instructions.

Answer 23

CORRECT ANSWER: A. The judge should give both an “imperfect self-defense” instruction and the “heat of passion” instruction.

A is Correct. The judge should give both manslaughter instructions and allow the jury to consider both theories of manslaughter in determining whether the intentional killing should be reduced to voluntary manslaughter. In a “heat of passion” killing, provocation will reduce a killing to voluntary manslaughter if four requirements are met: (i) the provocation was a type that would arouse sudden and intense passion that would cause a reasonable person to lose self-control, (ii) the defendant in fact was provoked, (iii) there was not sufficient time between the provocation and the killing for the passion of a reasonable person to cool, and (iv) the defendant in fact did not cool off between the provocation and the killing. Although some provocations were defined as inadequate as a matter of law at common law, modern courts are more likely to submit to the jury the question of what constituted adequate provocation. Similarly, whether there has been a sufficient time for a reasonable person to cool off is a factual question that depends on the nature of the provocation and the attendant circumstances. Here, the freshman’s belief that he was being shoved again by the senior and set up for a more severe beating may have rekindled his rage at the earlier punch and taunting by the senior. The jury should be allowed to consider all of the circumstances, including the earlier altercation, to decide whether there was a sufficient provocation or a sufficient time for a reasonable person to cool off. Hence, the judge should agree to give the “heat of passion” manslaughter instruction. Some states recognize, as this state apparently does, an “imperfect self-defense” doctrine under which a murder may be reduced to manslaughter even though the defendant unreasonably but honestly believed in the necessity of responding with deadly force. Such a defense appears to also have been raised by the facts. Thus, the judge should instruct the jury on both theories, making (A) the correct answer choice and (B), (C), and (D) incorrect.

Question 24

A defendant was being tried for the common law rape of a victim by force. The defendant alleged consent. A defense witness testified that he overheard the victim invite the defendant to become intimate with her. The prosecution possessed a certified copy of the witness’s three-year-old conviction for arson, a crime punishable by five years’ imprisonment. Without asking the witness about the conviction on cross-examination, the prosecution offered the copy of the conviction into evidence to impeach the witness’s credibility.

Is the copy of the conviction admissible?

A
No, because the prosecution failed to call the witness’s attention to the conviction on cross-examination.

B
No, because evidence of a conviction to impeach the character of a witness cannot be shown by extrinsic evidence.

C
Yes, but only if the trial judge finds that the probative value of admitting the evidence outweighs its prejudicial effect.

D
Yes, unless the trial judge finds that its probative value is substantially outweighed by the danger of unfair prejudice.

Answer 24

CORRECT ANSWER: D.

Answer D is correct. Evidence of certain criminal convictions is admissible under the Federal Rules to impeach a witness’s credibility. Such a conviction may be proven by a certified copy. If the crime did not involve dishonesty or false statement, the court has discretion to exclude the conviction under the general Rule 403 balancing test (note that a stricter balancing test applies when the witness is the defendant in a criminal case). Here, the witness is not the defendant and the crime of arson does not involve dishonesty or false statement, so the conviction will be admissible to impeach the witness as long as its probative value is not substantially outweighed by its prejudicial effect (i.e., meets the Federal Rule 403 balancing test). Answer A is incorrect. Unlike impeachment by proof of a prior inconsistent statement, it is not necessary to call the attention of a witness to a conviction prior to introducing evidence of the conviction. Answer B is incorrect. Such a conviction can be proven either by asking a witness if she was convicted of the crime or by introducing extrinsic evidence in the form of a certified copy of the conviction. This is not a case in which the question can only be asked on cross-examination. Answer C is incorrect. If the conviction being offered were that of the criminal defendant, it would be admissible only if the trial judge found that the probative value of admitting the evidence outweighed its prejudicial effect to the accused. Here, the conviction is that of a witness, not the accused, and the evidence is admissible if it complies with the more lenient balancing test set forth in Federal Rule 403.

Question 25

A plaintiff’s attorney called the plaintiff to the stand in a civil case. During his testimony, the plaintiff explained that in order to refresh his memory in preparation for his testimony, he had referred to a written summary of the events involved in the lawsuit, made by his investigator in anticipation of litigation. The plaintiff did not have the summary physically present with him on the witness stand. Prior to commencing cross-examination, the defendant’s attorney asked the plaintiff’s attorney to produce the summary so he could examine it.

What should the trial judge do?

A
Refuse the request, because the document is the work product of the plaintiff’s attorney.

B
Refuse the request, unless the court, in its discretion, determines that inspection and production are necessary in the interests of justice.

C
Grant the request, because the trial judge must order production if the plaintiff used the document to refresh his recollection.

D
Grant the request, only if the plaintiff adopted the summary as his testimony.

Answer 25

CORRECT ANSWER: B.

B) is correct. If a witness has refreshed his memory before trial by looking at a writing, it is within the court’s discretion to require production of the document and to permit inspection, cross-examination, and introduction of pertinent excerpts. Because the plaintiff here used the summary to refresh his memory prior to testifying, the judge has discretion to require its production if the judge decides that production is necessary in the interests of justice. (A) is incorrect. Even if a document is an attorney’s work product or is otherwise inadmissible, if the attorney permits a witness to refresh his memory from the document prior to testifying, then the trial judge has discretion to require production in the interests of justice. (C) is incorrect. A judge is required to order production of a document for inspection only when a witness uses the document on the witness stand to refresh his memory. If the plaintiff used it before taking the witness stand, the judge has discretion to order production, but is not required to do so. (D) is incorrect. The judge may in her discretion grant the request because the plaintiff admitted that he used the document prior to testifying in order to refresh his memory; it does not matter whether the plaintiff ultimately adopted the document as his testimony.

Question 26

An antiques purchaser who did not speak English sued a dealer for breach of contract, alleging that he had agreed to sell her an antique chair for $15,000 but had refused to accept her certified check when she came to pick up the chair. At the trial, the purchaser, through an interpreter, testified that she asked her brother to communicate to the dealer her offer to purchase the chair. She wishes to testify that her brother told her, “The dealer has agreed to sell you the chair for $15,000.” The agreement was not reduced to writing and the brother died a few days after that conversation.

If the jurisdiction has a typical “Dead Man Act,” what effect will the Act have upon the admissibility of the purchaser’s conversation with her brother?

A
It will render the conversation inadmissible because a civil action is involved.

B
It will render the conversation inadmissible because the purchaser is an interested party.

C
None, because the dealer is not a protected party.

D
None, because a civil action is involved.

Answer 26

CORRECT ANSWER: C. None, because the dealer is not a protected party.

The Dead Man Act will have no effect on the admissibility of the purchaser’s conversation with her brother because the dealer is not a protected party. A typical Dead Man Act provides that a party or person interested in the event, or her predecessor in interest, is incompetent to testify to a personal transaction or communication with a deceased when such testimony is offered against the representative or successor in interest of the deceased. Such statutes are designed to protect those who claim directly under the decedent from perjured claims. Here, the dealer is not a representative or successor in interest of the brother, such as an executor, administrator, heir, legatee, or devisee. Therefore, the dealer is not a protected party for purposes of a Dead Man Act. Because the testimony of the purchaser is not being offered against a representative or successor in interest of the decedent (her brother), the Dead Man Act is inapplicable. Regarding (A), it is true that the bar to competency created by a Dead Man Act applies only to civil cases. However, the mere fact that a civil action is involved will not trigger applicability of a Dead Man Act. As explained above, the absence of someone who is deemed to be a protected party will prevent a Dead Man Act from having any effect. Thus, (A) is incorrect. Regarding (B), it is true that the purchaser is an interested party (i.e., she stands to gain or lose by the direct and immediate operation of a judgment in this case). Nevertheless, (B) is incorrect because a Dead Man Act requires not only an interested person but a protected party. As has been noted, the dealer is not a protected party. (D) is incorrect because it is based on the assumption that a Dead Man Act does not apply to civil cases. In fact, such statutes apply only to civil cases, and not to criminal cases.