MIX TOPICS - BARBRI MCQ Flashcards
A husband was on trial for the murder of his wife. During the course of the trial, the prosecution sought to introduce evidence that, six months before the wife’s death, the husband had purchased a large insurance policy on her life, and two weeks prior to her death he purchased two more large policies on the wife’s life from separate insurance carriers. All notice requirements have been met.
If the defense objects to admission of such evidence, should the objection be sustained?
A. Yes, because such evidence would be more prejudicial than probative.
B. Yes, because evidence of insurance is inadmissible as a matter of public policy.
C. No, because the evidence tends to establish motive.
D. No, because the evidence tends to establish criminal propensity.
CORRECT ANSWER: C. No, because the evidence tends to establish motive.
Evidence of the husband’s purchases of insurance on the wife’s life shortly before her death is admissible because it has a tendency to make the husband’s murder of his wife more probable than it would be without the evidence. As a general rule, all relevant evidence is admissible if offered in an unobjectionable form or manner, as is the case here. This evidence is relevant because it establishes a motive for the murder, and facts showing motive for doing an act are circumstantial evidence that the act was done. Because there are no other grounds for excluding the evidence, it should be admitted. (A) is incorrect because exclusion of evidence on the ground of prejudice is a matter within the trial judge’s broad discretion, and Federal Rule 403 requires that the evidence’s probative value be substantially outweighed by the danger of unfair prejudice for it to be excluded. While all evidence is prejudicial to the adverse party, “unfair” prejudice refers to evidence that suggests a decision on an emotional or otherwise improper basis; evidence of the purchase of life insurance policies does not fall within this category. (B) is incorrect because it misapplies the rule excluding evidence of insurance. Federal Rule 411 excludes evidence of liability insurance on the issue of whether a person acted negligently or wrongfully. Evidence of insurance coverage (particularly where it is life insurance on the life of a homicide victim) is relevant and admissible for other purposes. (D) is incorrect for two reasons: First, the purchase of insurance does not establish a criminal disposition or a propensity to do criminal acts. Second, evidence of conduct offered to show criminal propensity is inadmissible character evidence under Federal Rule 404. Thus, if the evidence were offered to show criminal propensity, the objection should be sustained, not overruled. On the other hand, evidence of prior conduct (or misconduct) is specifically admissible under Rule 404(b) to show the defendant’s motive, which is what the insurance evidence is intended to show.
A witness is called in a contract action between a plaintiff and a defendant. The witness takes his oath and testifies. During cross-examination, the defendant’s attorney asked the witness this question: “Isn’t it true that even though you took an oath to tell the truth so help you God, you are an atheist and don’t even believe in God?”
Upon the proper objection, will the judge require that the witness answer this question?
A. Yes, because the question is relevant to the witness’s character for truthfulness.
B. Yes, because instead of taking the oath, the witness could have requested to testify by affirmation without any reference to God.
C. No, because evidence of the beliefs or opinions of a witness on matters of religion is not admissible to impair credibility.
D. No, because an attack on the competency of a witness must be made at the time the witness is sworn.
CORRECT: C. No, because evidence of the beliefs or opinions of a witness on matters of religion is not admissible to impair credibility.
The judge should not require that the witness answer the question because evidence of the religious beliefs of a witness is not admissible to challenge credibility. Lack of religious belief is no longer a basis for excluding a witness. Not only are a person’s religious convictions irrelevant in determining the competence of a witness, Federal Rule 610 provides that a witness’s religious beliefs or opinions are not admissible to show that the witness’s credibility is thereby impaired or enhanced. Thus, (C) is correct and (A) is incorrect. (B) is incorrect. While it is true that the witness could have requested a different type of oath, Rule 610 prohibits this type of question because it would have shown his lack of religious beliefs. (D) is incorrect because, as discussed above, lack of religious belief is no longer a basis for disqualification; thus, this would not constitute an attack on the witness’s competency.
A town in a rural state facing financial difficulties passed a variety of “sin taxes,” including one aimed at electronic game arcades frequented by local juveniles. The tax is a one cent per game tax imposed on the manufacturers of the games based on the estimated number of plays over a machine’s lifetime. There are no electronic game manufacturers in the state.
Which of the following constitutional provisions would support the best argument against enforcement of the tax?
A. The Equal Protection Clause.
B. Substantive due process.
C. The Privileges and Immunities Clause of Article IV.
D. The Commerce Clause.
CORRECT ANSWER: D. The Commerce Clause
The best argument against enforcement of the tax is that it violates the Commerce Clause. If Congress has not adopted laws regarding a subject, local governments are free to tax or regulate local aspects of the subject area as long as the tax or regulation does not discriminate against interstate commerce or unduly burden it. Here, the tax does not discriminate against interstate commerce, since it does not single out interstate commerce for taxation in order to benefit the local economy. However, it could be argued that the tax unduly burdens interstate commerce. A local tax will be held to unduly burden interstate commerce if the locality’s need for the revenue does not outweigh the burden on interstate commerce. The Supreme Court will consider whether there is a substantial nexus between the activity or property taxed and the taxing state, whether the tax is fairly apportioned, and whether there is a fair relationship between the tax and the benefit the taxed party receives from the state. Here, there is little nexus between the manufacturer and the town. The facts indicate that out-of-state manufacturers’ machines are used in the town, but do not indicate whether the manufacturers conduct any selling activity in the town. Similarly, nothing indicates that there is a relationship between the tax and any benefit that the manufacturers derive from the town. Thus, the tax would probably be unconstitutional under the Commerce Clause. (A) is not as good an argument as (D) because the Equal Protection Clause prohibits the states from treating similarly situated persons differently without sufficient justification. Where a classification does not involve a suspect or quasi-suspect class or a fundamental right, the classification will be upheld as long as it is rationally related to a legitimate government interest. While the tax here singles out arcade game manufacturers for special tax treatment, no suspect or quasi-suspect class is involved, nor is a fundamental right affected. Thus, the tax will be valid under the Equal Protection Clause because it is rationally related to the legitimate government interest of raising revenue. (B) is not a good argument because substantive due process requires that laws not be arbitrary. When laws do not involve a fundamental right, they will be held valid under the Due Process Clause as long as they are rationally related to a legitimate government interest. As established above, no fundamental right is involved and the tax is rationally related to a legitimate government interest. Thus, under the Due Process Clause the tax may be enforced. (C) is not a good argument because the Privileges and Immunities Clause of Article IV prohibits states from discriminating against out-of-state residents when a fundamental right is involved, and the tax here does not differentiate between residents and nonresidents.
The defendant is charged with the battery of a bouncer at a local tavern. At the trial, the prosecutor introduces evidence that while the bouncer was attempting to question the defendant about her intoxicated demeanor, the defendant committed a battery on the bouncer. The defendant attempts to defend against the charge on the basis of self-defense, insisting that the bouncer used excessive force in stopping her from entering the tavern. The defendant attempts to introduce into evidence an authenticated copy of the tavern records that show that three patrons had written complaints against the bouncer within the past six months for the use of excessive force. The prosecutor objects on the grounds that the records are inadmissible character evidence.
Should the court sustain the objection?
A. Yes, because the character of a victim can be established only by reputation or opinion evidence.
B. Yes, because there is no evidence that the incidents involving the three patrons were based on the same facts as the defendant’s claim.
C. No, because the records were authenticated.
D. No, because the character trait of a victim may be established by opinion evidence, reputation evidence, or specific acts of misconduct.
CORRECT ANSWER: A. Yes, because the character of a victim can be established only by reputation or opinion evidence.
The court should sustain the objection because the records are evidence of specific bad acts. The Federal Rules permit a defendant to introduce evidence of a bad character trait of the alleged victim if it is relevant to the charge or the defense, but limit it to reputation and opinion evidence. Evidence of specific acts of the person in question that demonstrates that person’s character is permitted only in a few instances, such as if the acts are relevant to some issue other than disposition to commit the crime charged. Here, no issue is raised by this evidence other than the bouncer’s propensity to use excessive force. (A) is therefore correct and (D) is wrong. (B) is wrong because the facts do not have to be identical if evidence of bad acts were otherwise admissible. (C) is wrong; documentary evidence, even if fully authenticated and relevant, may be excluded if it violates a rule of competency, such as the rule for character evidence. Here, the objection should be sustained because the document is improper evidence of a specific bad act.
On February 1, the owner of a bowling alley read in a magazine an ad from a major manufacturer of bowling balls offering sets of 40 balls in various weights and drilled in various sizes for $10 per ball. The owner immediately filled out the order form included in the ad for the 40 balls and deposited it, properly stamped and addressed, into the mail. On February 2, the bowling alley owner received in the mail a letter from the manufacturer, sent out as part of its advertising campaign, stating in relevant part that it will sell the bowling alley owner 40 bowling balls at $10 per ball. A day later, on February 3, the manufacturer received the bowling alley owner’s order. On February 4, the balls were shipped.
On what day did an enforceable contract arise?
A. February 1, the day the bowling alley owner deposited his order in the mail.
B. February 2, the day the bowling alley owner received the letter from the manufacturer.
C. February 3, the day the manufacturer received the bowling alley owner’s letter.
D. February 4, the day the balls were shipped.
CORRECT ANSWER: D. February 4, the day the balls were shipped.
The contract arose when the balls were shipped. The general rule is that an offer can be accepted by performance or a promise to perform unless the offer clearly limits the method of acceptance. Here, the offer would be the bowling alley owner’s order, because a magazine ad is usually held to be merely solicitation to accept offers rather than an offer. Thus, the manufacturer accepted and the contract was formed when it shipped the balls. (A) is wrong because the bowling alley owner’s order was an offer to buy, and no contract could be formed until that offer was accepted. (B) is wrong because this is a case of crossing offers; even though both offers contain the same terms, they do not form a contract. (C) is wrong because no contract will be formed until there has been an acceptance, and, as stated, the bowling alley owner’s letter was merely an offer.
A store sold office equipment and supplies to various businesses in the area. The store entered into a written agreement with an electronics company to purchase all of its monthly requirements of printers for a period of five years at a specified unit price. The agreement contained a clause prohibiting assignment of the contract. Shortly thereafter, the electronics company assigned the contract to a finance company as security for a loan. The store subsequently ordered the printers from the electronics company, which were delivered on time.
Which of the following accurately states the legal effect of the clause prohibiting assignment of the contract?
A. The clause as properly interpreted was not breached, and the assignment was effective.
B. The clause made the assignment to the finance company ineffective.
C. The electronics company’s assignment was a breach but was nevertheless effective to transfer to the finance company the electronics company’s rights against the store.
D. The clause is effective if the parties can establish a rational reason for including the covenant into their agreement.
CORRECT ANSWER: A.
A is Correct. The clause was not breached, and the assignment was effective. Under the UCC, which governs this sale-of-goods case, “unless the circumstances indicate the contrary, a prohibition of assignment of ‘the contract’ is to be construed as barring only the delegation to the assignee of the assignor’s performance.” Here, the electronics company assigned to the finance company the right to receive payment on its contract with the store. There was no delegation of duties to the finance company (the assignee). Therefore, when the electronics company “assigned the contract” to the finance company, it assigned only the right to payments, and it did not breach its contract with the store. (B) is wrong because the only time a nonassignment clause makes an assignment ineffective is when the clause itself states that any assignment will be void or when the assignee has notice of the nonassignment clause. (C) is wrong because the assignment was not a breach. (C) is stating the rule for when the contract contains a clause prohibiting the assignment of “contractual rights.” In that case, the assignment is effective, but the obligor may sue for breach. Here, the contract prohibits assignment of the contract, not contractual rights. (D) is wrong because the covenant would not stand or fall on its rationale.
A town adopted an ordinance providing that a person must have been a resident of the town for at least one year to be eligible to vote in school board elections. A resident who moved to the town seven months ago attempted to register to vote in the school board elections scheduled for the next month. However, the town clerk refused to register the resident because he will not have resided in the town for a full year prior to the election. The resident filed a class action suit on behalf of all of the new residents of the town, challenging the validity of the one-year residency requirement.
Which of the following statements is correct?
A. If the resident’s suit is not heard before the election, it will be dismissed as moot, because the resident will have met the residency requirement by the time of the next annual election.
B. The resident will prevail even if the matter is not decided until after next month’s election
C. As long as there is some legitimate purpose for the one-year residency requirement, such as the need to prepare voting lists, the residency requirement will be upheld.
D. The resident will lose because one-year residency requirements have been held to be permissible restrictions on the right to vote in local elections.
CORRECT ANSWER: B. The resident will prevail even if the matter is not decided until after next month’s election
The resident will prevail even if the matter is not decided until after the election, because the suit is not moot and the residency requirement is unconstitutional. The resident’s suit is not moot even if the matter will not be decided until after the election because other members of the class might have a live controversy. Under the case and controversy requirement of the Constitution, there must be a real, live controversy at all stages of the suit. If through the passage of time, the controversy between the parties is resolved, the case is said to be moot. However, there are exceptions to the mootness doctrine. In a class action, it is not necessary that the suit by the named plaintiff be viable at all stages, as long as the claim is viable by some member of the class. Thus, the suit here would not be moot. Moreover, the residency requirement here violates the resident’s fundamental rights to vote and to interstate travel. A restriction on the right to vote is subject to strict scrutiny and is valid only if it is necessary to achieve a compelling state interest (otherwise the restriction violates the Equal Protection Clause by treating new residents differently from old residents). Relatively short residency requirements (e.g., 30 days) have been upheld as being necessary to promote the compelling interest of assuring that only bona fide residents vote. However, the Supreme Court has struck down longer durational requirements for lack of a compelling justification. Thus, the one-year requirement here probably unconstitutionally impinges on the right to vote. The residency requirement also impinges on the fundamental right to travel in the same manner (i.e., it discourages people from migrating by denying them the right to vote without a compelling reason). Thus, the requirement is invalid. (A) is incorrect because, as indicated above, the case will not be moot since other members of the class might have a live controversy. (C) is incorrect because it applies the wrong standard. Because fundamental rights are affected by the residency requirement here, the government must show a compelling justification; a mere rational or legitimate basis is not enough. (D) is incorrect because, as stated above, the Supreme Court has found that there was no compelling interest for a one-year residency requirement in order to vote.
A retailer entered into an oral contract with an office supply wholesaler to buy 100 file boxes for an upcoming back to school sale at the retailer‘s store. The wholesaler agreed to deliver the file boxes in two weeks at a cost of $4 per file box. A week later, the retailer phoned the wholesaler and asked if she could increase her order to 200 file boxes. The wholesaler agreed. The wholesaler delivered the 200 file boxes as promised, but the retailer accepted only 150 upon discovering that she lacked storage space for all 200.
May the wholesaler recover damages with respect to the 50 file boxes that were not accepted?
A. Yes, because the retailer accepted $600 worth of file boxes.
B. Yes, because the modification was for less than $500.
C. No, because the contract as modified was for $800.
D. No, because the wholesaler is a merchant with respect to file boxes.
CORRECT ANSWER: C. No, because the contract as modified was for $800.
The wholesaler may not recover damages. Under the UCC Statute of Frauds, a contract for the sale of goods for $500 or more is unenforceable unless evidenced by a writing signed by the party sought to be held liable. The original contract was for $400 and, thus, was not within the Statute. Whether a modification must be in writing to be enforceable depends on whether the entire contract price as modified is within the Statute. Here, the retailer and the wholesaler modified their original contract to 200 file boxes, bringing the total price to $800. Thus, the modification was unenforceable under the Statute of Frauds, and the wholesaler cannot collect damages with respect to the 50 unaccepted file boxes. (A) is incorrect. Acceptance is an exception to the Statute of Frauds—but only to the extent of the goods accepted. That is, an oral contract for the sale of goods for $500 or more is enforceable to the extent the goods are accepted. Here, the original contract for 100 boxes is enforceable, but the modification is not. However, since the retailer accepted 50 additional boxes, the modified contract is enforceable to the extent of the additional 50 boxes accepted. The fact that the accepted amount meets the Statute of Frauds $500 threshold does not make the contract enforceable for all 200. (B) is incorrect because, as noted above, when determining whether a contract for the sale of goods is enforceable, we look at the whole contract price as modified; the price of the modification itself does not matter. (D) is incorrect because the fact that the wholesaler is a merchant with respect to the goods being sold (file boxes) has no bearing on the enforceability of the contract here.
The owner of an old car parked it in front of his house with a “for sale” sign in the windshield. In response to an inquiry from his neighbor, the car owner said that he would take $400 for the car. The neighbor responded, “You’ve got a deal.” Because it was a Sunday, and the banks were closed, the neighbor told the car owner that he would come to his house with the $400 the next day at about 6 p.m. The car owner said that was fine. At 9:15 the next morning, the car owner called his neighbor and told him that when they had talked the previous day, he forgot that he had just put two new tires on that car and that he would need an extra $50 to cover their cost. The neighbor agreed to bring $450 in cash to the car owner’s house at about six o’clock.
Is the neighbor legally bound to pay the car owner the additional $50?
A. Yes, because the original contract was not in writing.
B. Yes, because the contract, as modified, does not need to be in writing.
C. No, because no additional consideration was given for the oral modification.
D. No, because neither the neighbor nor the car owner is a merchant.
CORRECT ANSWER: B. Yes, because the contract, as modified, does not need to be in writing.
The neighbor must pay the car owner the additional $50 because the parties have an enforceable contract. A contract for the sale of goods (the car) was formed when the neighbor said, “You’ve got a deal.” The parties then orally agreed to a modification of the contract when the car owner called his neighbor the next morning. Under the Statute of Frauds provision in the UCC, which applies to all contracts for the sale of goods, a promise requires a writing signed by the party to be charged to be enforceable if it is for the sale of goods of $500 or more. Here, the contract as modified is under $500, so it is enforceable even though it is not in writing. (A) is incorrect because the fact that the original contract was not in writing is irrelevant to the issue of whether the modified contract is enforceable. If the modification had caused the contract to reach or exceed $500, the car owner could not have collected the additional $50 from his neighbor. (C) is incorrect because under UCC section 2-209, no consideration is needed for a good faith modification of a contract for the sale of goods. (D) is incorrect because the UCC rules on modifications and the Statute of Frauds apply to all contracts for the sale of goods, not just those between merchants.
An owner of land who was also a home contractor agreed in writing with a buyer to build a house to the buyer’s specifications on his (the contractor’s) land and then sell the house and lot to the buyer. The contract provided that the house was to be completed by March 1, with full payment due at that time. On March 1, the house was nearly complete, but due to delays in the delivery of materials, the contractor would need 20 more days to finish construction. On March 5, after discovering that the house had not yet been completed, the buyer notified the contractor in writing of her election to cancel the contract because of the contractor’s failure to deliver the house by March 1. The contractor responded that, due to an unanticipated strike at his supplier’s company, performance had been unforeseeably delayed and that the house would be ready by March 20. The buyer responded that she would no longer accept delivery of the house and land. The contractor then brought an action to recover damages for breach of contract.
Who will prevail?
A. The buyer, because the express date listed in the contract indicates that time was of the essence.
B. The buyer, because delivery by March 1 was a condition precedent to the buyer’s performance.
C. The contractor, because the strike was truly an unforeseeable intervening event.
D. The contractor, because the buyer received the substantial benefit of the bargain.
CORRECT ASWER: D. The contractor, because the buyer received the substantial benefit of the bargain.
The contractor will prevail because the buyer received the substantial benefit of her bargain. The failure to perform on time is a breach of contract, but in this case, it was a minor breach. Unless the nature of the contract is such as to make performance on the exact day agreed upon of vital importance, or the contract provides that time is of the essence, failure to perform at the stated time is not a material breach. Here, the home was nearly complete, and the delay was relatively short. The contract did not specify that time was of the essence; thus, the breach was minor. The remedy for a minor breach is damages; the aggrieved party is not relieved of her duty to perform. (A) is incorrect because merely stating a date for performance does not indicate that time is of the essence. There must be some explicit statement indicating that time is of the essence. (B) is incorrect. Although the delivery on March 1 is a condition precedent to the buyer’s duty to pay, the condition is excused by substantial performance. The test for whether a party has substantially performed is the same as the one for assessing whether a breach is minor or material. Here the breach is minor, the contractor substantially performed, and the condition is excused. (C) is incorrect because an unforeseeable event does not discharge a party’s duty to perform. A strike at the contractor’s supplier does not rise to the level of impossibility or impracticability, which would discharge his duty to perform. The contractor could have procured the supplies elsewhere.
An electronics store located in Los Angeles, California, purchases electronics from an electronics corporation located in San Antonio, Texas. On January 19, the electronics store mailed to the corporation an order for $200,000 worth of electronics, specifying that delivery was to be no later than February 25, F.O.B. South Texas Railroad Depot, San Antonio, Texas.
The corporation delivered the electronics to the railroad depot on February 15 and notified the electronics store by fax that its order was scheduled to arrive at the Southern Pacific Railroad Depot in Los Angeles on February 20. On February 17, the corporation learned that the electronics store was insolvent. The corporation demands immediate payment in cash for the electronics.
Is this demand permissible?
A
No, because the corporation may only refuse to tender delivery of the goods by stopping them in transit.
B
No, because the contract terms specifying delivery F.O.B. at the South Texas Railroad Depot passed title to the goods to the electronics store when the goods were delivered to the South Texas Railroad Depot.
C
No, because the payment terms were expressly stated in the purchase order of January 19.
D
Yes, because the electronics store is insolvent.
CORRECT ANSWER: D. Yes, because the electronics store is insolvent.
The corporation’s demand is permissible. If a buyer is insolvent, UCC section 2-702 permits the seller to refuse to deliver except for cash, including payment for all goods previously delivered under the contract. It does not matter that title passed on delivery to the South Texas Railroad Depot. Thus, (D) is correct, and (B) is wrong. (A) is wrong because while the corporation could stop the goods in transit under UCC section 2-705, even after title passes, it could also demand cash payment. (C) is wrong because the UCC provisions allow the above modifications to payment terms upon finding the buyer insolvent.
A farmer orally agreed to lease a tractor from a company for $500. However, when the company’s secretary put the agreement into writing she accidentally typed in a charge of $300. Both the company and the farmer signed the contract without noticing the mistake in the price. When it came time for payment, the farmer refused to pay more than $300 for the rental of the tractor.
If the company brings an action for the difference between the payment as orally agreed and as memorialized in the contract, which of the following, if proven, would most benefit the company?
A
The parties made a mistake in integration.
B
The writing was only a partial integration.
C
The writing was intended as a sham.
D
The company or the farmer misunderstood the amount the rental payment was to be.
CORRECT ANSWER: A. The parties made a mistake in integration.
The most beneficial scenario is if the parties made a mistake in integration. Where the parties make a mistake in integrating their agreement into a writing, the courts will permit the error to be corrected. (B) is not helpful to the company because a writing that is a partial integration cannot be contradicted, it may only be supplemented by proving up consistent additional terms. (C) is wrong because if the writing were a sham, no rights would arise from it. (D) is wrong because if one of the parties made a mistake as to the payment amount, he would not necessarily be entitled to relief.
A woman decided to have a painting done of herself. She contracted in writing with an artist, who agreed to paint the woman for $10,000. The fee was payable on completion of the painting, provided that the painting was to the woman’s “complete and utter satisfaction.” On the same afternoon that the artist entered into the contract with the woman, he assigned the contract to his cousin. The artist then painted the woman’s picture. After the job was done, the woman told him, “That’s a very good likeness of me, but it shows my defects, so I’m not satisfied.” She refused to accept the painting or to pay the artist or his cousin.
Can the cousin recover from the woman?
A
Yes, because the condition in the agreement between the woman and the artist did not apply to his cousin.
B
Yes, because otherwise an unjust enrichment will occur.
C
No, because rights arising under personal services contracts are not assignable.
D
No, because the woman was not satisfied with the painting.
CORRECT ANSWER: D. No, because the woman was not satisfied with the painting.
D is Correct. The cousin will not recover from the woman because she has a defense inherent in the contract. When one of the original parties to a valid contract assigns his rights under the contract to a third party, the assignee may enforce his rights against the obligor directly but is generally subject to any defenses that the obligor had against the assignor. As long as the defense is inherent in the contract, such as failure of a condition, it is always available against an assignee because it was in existence when the contract was made (even if whether the obligor would be able to utilize it was uncertain). Here, the artist (the assignor) and the woman (the obligor) had a valid contract—her promise to purchase the painting only if she was satisfied with it is not illusory because she has to exercise her right of rejection in good faith. When the artist assigned his rights under the contract to his cousin (the assignee), his cousin became subject to the condition in the contract that the woman be satisfied with the painting. Her dissatisfaction with the painting excuses her duty to pay for it; this is a defense inherent in the contract that precludes the cousin’s recovering from the woman. (A) is incorrect because the assignee always takes subject to conditions in the original agreement between the obligor and the obligee. The only defenses that the obligor could not raise against the assignee are setoffs and counterclaims unrelated to the assigned contract that came into existence after the obligor learned that the contract was assigned. (B) is incorrect because the woman has not been enriched by the artist’s services. She has justifiably refused to accept the painting and has received no benefit from the transaction that would constitute unjust enrichment. (C) is incorrect because the only right that the artist has assigned is the right to receive payment from the woman if she accepted the painting. The woman’s duty is the same regardless of to whom she has to pay the money; therefore, the artist could validly assign his right to his cousin. Note that the analysis would be different if the artist had also attempted to delegate his duty of painting the woman to his cousin: duties involving personal judgment and skill may not be delegated. When an assignor assigns “the contract,” the words are interpreted as including a delegation of the duties unless a contrary intention appears. Here, the contrary intention is indicated by the fact that the artist did the painting rather than his cousin; hence, there was no attempt by the artist to delegate a nondelegable duty.
A homeowner entered into a written agreement with a contractor to remodel the homeowner’s basement for a set amount. Among the contract’s specifications was a provision that the contractor was to use an imported Brazilian hardwood for the paneling. The contractor began the job, and then assigned his right to payment under the agreement to a creditor. When the job was a little more than half completed, the homeowner sold the house to a buyer. In a document separate from the deed of conveyance, the homeowner assigned her right to the contractor’s labor and delegated her duty to pay under the contract to the buyer. The contractor completed the job on time but used Wyoming knotty pine instead of Brazilian hardwood for the paneling. The knotty pine is considered to be inferior to the Brazilian hardwood and is much less expensive, and the buyer was very displeased when he saw the result.
Who can the buyer sue for breach?
A
The original homeowner only.
B
The contractor only.
C
The contractor and his creditor.
D
The homeowner, the contractor, and the creditor.
CORRECT ANSWER. B. The contractor only.
B is Correct. The buyer can sue only the contractor for breach. The effect of a valid assignment of contract rights is to establish privity of contract between the obligor and the assignee while extinguishing privity between the obligor and assignor. The assignee then replaces the assignor as the real party in interest and he alone is entitled to performance under the contract. As the real party in interest, he may enforce his rights against the obligor directly. Here, the original homeowner (the assignor) has assigned to the buyer (the assignee) the right to receive the performance of the contract by the contractor (the obligor). Because the contractor has materially breached the contract by departing from the specifications and using a cheaper paneling, the buyer can sue the contractor for breach. (A) and (D) are incorrect because the buyer has no grounds for suing the original homeowner (the assignor). The assignor does not guarantee that the obligor will perform the contract for the assignee. The assignor only warrants that (i) she has the right to make the assignment, (ii) the right is not subject to limitations or defenses other than those stated or apparent at the time of assignment, and (iii) she will do nothing to defeat or impair the assigned right. Here, the homeowner did nothing to impair the assignment and the contractor does not appear to have any defenses against the homeowner. Thus, the buyer cannot sue the homeowner. (C) is incorrect because the creditor has no duties under the contract; he just has the right to receive payment. Unless a contrary intention appears, courts will construe language assigning “the contract” as including an assumption of the duties by the assignee. Here, however, the contractor assigned only his right to payment to the creditor and continued to perform the duties under the contract himself. Thus, no delegation of duties will be implied and the creditor cannot be sued for breach.
A union filed suit against a corporation, known for its antiunion management, asserting that its members were being discharged in retaliation for membership in the union rather than for any failure to perform their jobs properly. Under the pretrial discovery orders, a union employee was allowed to examine all of the records held in the corporation’s files concerning discharge of employees for a seven-year period prior to the instigation of suit by the union. The employee sorted through this large volume of material and discovered that persons who were union activists usually had “lack of corporate spirit” listed as their reason for discharge, while other fired workers tended to have more specific grounds for discharge listed, e.g., persistent lateness. The employee developed a chart showing grounds for dismissal of union members versus nonmembers based on the data in the files. At the trial, the union placed the employee on the stand. She testified in some detail regarding how she had conducted her research. The employee brought out the chart and the union’s lawyer asked that the chart be admitted into evidence. The corporation’s attorney objected.
How should the court rule on the admissibility of the chart?
A. Admissible, because copies of the original documents upon which the chart was based were available to the corporation prior to trial.
B. Admissible, because the chart is helpful to the trier of fact.
C. Inadmissible, because it is hearsay not within any exception.
D. Inadmissible, in the absence of the underlying records having been first introduced into evidence.
CORRECT ANSWER: A. Admissible, because copies of the original documents upon which the chart was based were available to the corporation prior to trial.
The chart is admissible because the original documents are in the corporation’s files. The original document or best evidence rule generally requires the original writing to be produced when the terms of the writing are sought to be proved and are material to the case. [Fed. R. Evid. 1002] However, under Federal Rule 1006, the contents of voluminous writings that are otherwise admissible may be presented in the form of a chart as long as the original documents are available to the other party for examination and copying. Here, the underlying documents belonged to the adverse party, and thus the corporation had unlimited access to them. (B) is incorrect because the chart could be helpful to the trier of fact and still be inadmissible, such as if the underlying material were not available to the corporation or the chart were based on inadmissible hearsay. Furthermore, (B) is not as good a choice as (A) because (B) states a generality (it basically states the relevance requirement) whereas (A) applies the law to the specific facts of this case. (C) is incorrect because the chart is admissible provided the underlying documents are admissible. Even if the documents in this case would be hearsay, they would be admissible under the business records exception to the hearsay rule because they are records of events made in the regular course of business. [Fed. R. Evid. 803(6)] (D) is incorrect because Rule 1006 is an exception to the best evidence rule designed to avoid the introduction of voluminous writings into evidence; therefore, it does not require their introduction as a prerequisite to introduction of a chart.
A city’s water board election laws provide that, although members of the board are elected at large, one member of the board is required to live within each of the five designated water districts within the city. The city’s population was more or less evenly distributed among the districts when this election law was enacted. A resident and registered voter of the city investigated the district residency requirement and discovered that most of the city’s newer residents had moved into the same two water districts, so that the city’s population was no longer evenly distributed among the five water districts. Instead, 80% of the city’s residents lived within its central and eastern water districts, while the other 20% of the city’s residents were scattered among its three other, more rural, districts.
If the resident files suit in federal court challenging the constitutionality of the residency requirement, how will the court most likely rule?
A. The residency requirement is unconstitutional because it impairs the voters’ equal protection rights, in that it gives the voters in the less populous districts more effective representation on the water board.
B. The residency requirement is unconstitutional because it violates the candidates’ equal protection rights.
C. The residency requirement is constitutionally permissible because the water board members do not exercise legislative power.
D. The residency requirement is constitutionally permissible because the water board members are elected at large.
CORRECT ANSWER: D. The residency requirement is constitutionally permissible because the water board members are elected at large.
The residency requirement is permissible because the water board is elected at large. The Equal Protection Clause prohibits state dilution of the right to vote, so that when a governmental body establishes voting districts for the election of representatives, the number of persons in each district may not vary significantly. This is known as the principle of “one person, one vote.” This principle applies to almost every election where a person is being elected to perform normal governmental functions (e.g., an election for trustees for a junior college district). However, the principle of one person, one vote generally is inapplicable where there is an at-large system of election (except where the system is adopted for discriminatory purposes). Here, the water board members are elected by all of the qualified voters in the city in an at-large system (rather than having the voters of each individual district select one board member apiece), and no discriminatory intent is evident. Thus, the statutory provision requiring board members to reside in each of the five districts does not result in an imbalance or a dilution of the voting rights of the citizens of the city. Consequently, (A) is incorrect, and (D) presents an accurate statement of the constitutionality of the residency requirement. (Note that the answer might be different under federal statute because the city would have to prove a valid, nondiscriminatory purpose.) (C) is incorrect even though it reaches the correct result. While the Supreme Court has exempted special purpose water storage districts from the one person, one vote requirement, the basis of the decision was the specialized nature of the entity. The constitutional requirements apply not only to legislators, but also to elected administrative and executive officials. (B) is incorrect because, even assuming that the residency requirement violates the candidates’ equal protection rights, the resident would not have standing to raise the issue. Generally, a claimant must assert his own constitutional rights and cannot assert the rights of third parties.
A landowner entered into a written agreement with a real estate broker whereby the broker would receive a commission of 10% of the sale price if he procured a “ready, willing, and able buyer” for the landowner’s property and if the sale actually proceeded through closing. The broker found a buyer who agreed in writing to buy the property from the landowner for $100,000, the landowner’s asking price. The buyer put up $6,000 as a down payment. The agreement between the landowner and the buyer contained a liquidated damages clause providing that, if the buyer defaulted by failing to tender the balance due of $94,000 at the closing date, damages would be 10% of the purchase price. The landowner included that clause because she was counting on using the proceeds of the sale for a business venture that would likely net her at least $10,000.
The buyer became seriously ill and defaulted. When he recovered, he demanded that the landowner return his $6,000, and the landowner refused. The broker also demanded the $6,000 from the landowner and was refused. The broker and the buyer filed separate suits against the landowner, with the buyer pleading impossibility of performance. The two cases are consolidated into a single case.
How should the court rule as to the disposition of the $6,000?
A. The landowner keeps the entire $6,000, because the liquidated damages clause is reasonable.
B. The buyer gets the entire $6,000, because his performance was impossible.
C. The broker gets the entire $6,000, which is 60% of the commission he is entitled to, because he substantially performed his part of the contract by producing a buyer willing to pay the $100,000 asking price.
D. The broker gets $600 and the landowner gets $5,400, because the damages clause was reasonable and the broker is entitled to 10% of whatever the landowner realizes from the deal.
CORRECT ANSWER: A. The landowner keeps the entire $6,000, because the liquidated damages clause is reasonable.
The landowner may keep the $6,000 as liquidated damages. A liquidated damages clause is enforceable if: (i) damages are difficult to ascertain at the time of the making of the contract, and (ii) the damages are a reasonable forecast of compensatory damages. Here, the landowner was unsure what her damages would be if she did not receive the sales proceeds from the property, but $10,000 seemed a reasonable amount. Thus, both criteria for valid liquidated damages clauses are met. (B) is incorrect because impossibility must be objective; i.e., performance cannot be accomplished by anyone. Physical incapacity of a person necessary to effectuate the contract may discharge contractual duties if that person’s performance is clearly impossible. (Usually this occurs in personal services contracts, where only that one person can perform the required duty.) Although the buyer was seriously ill, it is not clear that this made it impossible for him to produce the $94,000. Without more facts, it is reasonable to assume that someone else could have delivered the money or that his mortgage would still have gone through, etc. (C) is incorrect because the conditions for the broker’s payment were not met: It is debatable whether he produced a “ready, willing, and able” buyer, and in any event the sale did not actually proceed through closing. (D) is incorrect because the broker was to receive proceeds from the sale of the property; the $6,000 was damages and not sale proceeds.
Which of the following suits would not fall within the United States Supreme Court’s original jurisdiction under Article III, Section 2?
A. A suit seeking to assert the interest of state citizens in retaining diplomatic relations with a foreign nation.
B. A suit seeking to protect a state’s timber from allegedly illegal cutting by residents of another state.
C. A suit seeking to enjoin enforcement of an allegedly unconstitutional executive order that will greatly limit the state’s authority to make policy decisions regarding admission to state universities.
D. A suit by the United States Government seeking to enjoin state construction of a bridge over a navigable waterway.
CORRECT ANSWER: A. A suit seeking to assert the interest of state citizens in retaining diplomatic relations with a foreign nation.
The suit to assert state citizens’ rights is not within the Supreme Court’s original jurisdiction. Under Article III, Section 2, the United States Supreme Court has original jurisdiction in all cases affecting ambassadors, other public ministers, and consuls, and in which a state is a party. In (A), the state is not really seeking to advance or protect any interest of its own. Rather, the state is attempting to act in parens patriae (i.e., to act as a representative of its citizens, thereby asserting their interests). Thus, the state is not an actual party in this case in the sense that the Supreme Court has traditionally required to justify exercise of original jurisdiction. (B) would be a proper case for institution under the Supreme Court’s original jurisdiction because it involves an attempt by a state to protect its own economic interest rather than to assert the interests of its citizens in a representative capacity. Similarly, (C) sets forth a situation in which a state is attempting to defend its asserted right to render decisions affecting admissions policies relative to its own state universities. Thus, in (C) the state is an actual party to the case. Finally, (D) describes an attempt by the federal government to prevent state construction of a bridge (presumably pursuant to the admiralty power). Clearly, this case involves an alleged grievance that will be directly committed by a state. Therefore, the state is an actual party.
A man shopping for a leather jacket at a clothing store could not decide between two jackets, so the proprietor, who knew the man and his family well, let him take one of the jackets on approval. No mention was made by the proprietor of the method of payment he expected. The man wore the jacket on a visit to his grandfather, who liked it so much that when the man told him what the jacket cost and that he had taken it on approval, the grandfather said he would buy it for him if he promised to give some of his old clothes to a favorite charity for the poor at Christmastime. The man wholeheartedly agreed to donate the clothes to the charity at Christmas. Very pleased, the grandfather called the shop and told the proprietor to send the bill for the jacket to him, which he did. Before the bill was paid and before the Christmas season arrived, the grandfather fell ill and died. The grandfather’s executor has refused to pay the bill, and the man has not yet given any old clothing to the charity.
Will the proprietor be able to recover the price of the jacket from the estate?
A. Yes, because the proprietor was the intended beneficiary of the promise between the man and his grandfather.
B. Yes, because the man has no duty to give the clothing to the charity.
C. No, because the grandfather’s implied promise to pay the proprietor arising from the phone call is unenforceable.
D. No, because a condition has not yet occurred.
CORRECT ANSWER: A. Yes, because the proprietor was the intended beneficiary of the promise between the man and his grandfather.
The proprietor can recover the cost of the jacket from the grandfather’s estate because the proprietor is an intended third-party beneficiary and his right to enforce the contract has vested. The rights of an intended third-party beneficiary vest when the beneficiary (i) manifests assent to the promise in a manner invited or requested by the parties; (ii) brings suit to enforce the promise; or (iii) materially changes his position in justifiable reliance on the promise. Here, the proprietor qualifies as an intended beneficiary of the agreement between the man and his grandfather because the proprietor was expressly designated in the contract, he was to receive performance directly from the grandfather, and he stood in an existing contractual relationship with the man that required the man to either pay for the jacket or return it, making it likely that the young man’s purpose in making the arrangement with his grandfather was to satisfy the obligation to the proprietor. The proprietor can enforce the contract because his rights vested when he sent the bill to the grandfather at the grandfather’s request. Thus, the proprietor will prevail against the grandfather’s estate. (B) is wrong because the man does have a duty to give the clothes to the charity; if he does not do so, he will be in breach of his contract with his grandfather, and this would give his grandfather’s estate a defense to payment. However, the man’s time for performance (Christmastime) has not yet occurred, and so he is not in breach. Nevertheless, this fact is not the reason the proprietor will recover; he will recover due to his status as an intended beneficiary, not because this possible defense has been negated. (C) is wrong because both the result and the rationale are incorrect. The proprietor is not relying on the grandfather’s implied promise to him in the phone call; he is seeking to enforce his rights as a third-party beneficiary of the agreement between the man and his grandfather. Even if the grandfather had not called the proprietor, the proprietor could still have recovered against the grandfather’s estate because of his status as a third-party beneficiary. (D) is wrong because the man’s giving the clothes to the charity is not a condition that must be fulfilled before the grandfather’s estate must pay. The grandfather promised to pay for the jacket if the man promised to donate the clothes; i.e., the consideration for the grandfather’s promise was the man’s promise, not his actually donating the clothes. As soon as the man made the promise, the grandfather’s duty to pay became absolute. (If the man does not donate the clothes, he will be in breach of his contract with his grandfather, but the grandfather’s performance was not conditioned on the man’s donating the clothes.)
A passenger sued a limo driver for an injury the passenger sustained in an accident in State B, and the passenger had the limo driver promptly served with a summons and complaint. Forty days thereafter, with no answer being filed, the passenger requested and was granted an entry of default by the court clerk, and a date for a hearing for a default judgment was set. Notice of the hearing for the default judgment was sent to the limo driver two weeks prior to the hearing.
Assuming that the hearing for the default judgment has not yet taken place, what is the limo driver’s best method to get a hearing on the merits of the case?
A
Have the entry of default set aside because the clerk did not have the authority to enter a default, since the amount claimed was not for a sum certain.
B
Have the entry of default set aside because no notice was given before the clerk entered the default.
C
Have the entry of the default set aside for good cause.
D
Appear at the hearing for a default judgment.
CORRECT ANSWER: A. Have the entry of default set aside because the clerk did not have the authority to enter a default, since the amount claimed was not for a sum certain.
The limo driver’s best approach is to have the entry of default set aside for good cause. Although there are no facts to indicate that good cause exists to have the default set aside, having the default vacated before the hearing on the default judgment represents the only method by which the limo driver can get a hearing on the merits of the case. If the limo driver can have the entry of default vacated prior to the hearing for a default judgment, the hearing would not proceed, and the case would proceed as any other case in which no default was entered. (A) and (B) are incorrect, as both incorrectly state the procedure for obtaining an entry of default. Under Federal Rule of Civil Procedure 55(a), if the defendant does not answer or otherwise defend, the court clerk may enter a default on the record. The default may be entered even if the amount of damages is yet to be determined. No notice to the defendant is required for entry of default. Notice to the defendant of the hearing for a judgment in default is required when the defendant has appeared in some fashion. (D) is incorrect. The entry of the default cuts off the defendant’s right to contest the case on the merits. Although the defendant may appear at the hearing for the default judgment to contest damages, he may not contest liability until the entry of default is vacated.
A landlord hired a builder to construct a 10-unit apartment building on a single foundation. Within the first year after construction, the floors and walls began to crack. The landlord sued the builder in federal court, alleging that the builder was negligent in constructing the foundation. The builder denied those allegations, and after a year of extensive discovery, the case went to a jury trial, where all issues were litigated.
After closing arguments, the judge presented the jury with a verdict form to complete after deliberations. In addition to instructing the jury to select which party would be granted the verdict, the form also asked several specific questions regarding how the jury decided specific facts in the case.
With what form of verdict was the jury presented?
A
A special verdict form.
B
A general verdict form.
C
A directed verdict form.
D
A general verdict form with interrogatories.
CORRECT ANSWER: D. A general verdict form with interrogatories.
The jury was presented with a general verdict form with interrogatories. In such a case, the jury is asked to give a general verdict and also to answer specific questions concerning certain ultimate facts in the case. The purpose is to ensure that the jury properly considered the important issues. Interrogatories must be submitted with the general verdict to test the verdict’s validity. [See Fed. R. Civ. P. 49(b)] Here, the verdict form the judge presented to the jury is a general verdict with interrogatories because it asked the jury to decide ultimately which party prevailed, but also asked specific questions regarding how the jury decided certain facts to test the verdict’s validity. (A) is wrong because it incorrectly classifies the verdict form. In a special verdict, a jury is asked to make a finding on all material conclusions of fact, and the court applies the law. The procedure for a special verdict is to submit to the jury a series of questions regarding each ultimate fact. The court then makes legal conclusions based on those facts. [See Fed. R. Civ. P. 49] Here, although the verdict form did ask specific questions, it also asked the jury to render the verdict, instead of having the court apply the law and reach the legal conclusion. As such, it is not a special verdict form. (B) is wrong because, in a general verdict, the jury finds for the plaintiff or defendant and gives the amount of damages or relief due. Here, the jury was asked to render a verdict for the party, but was also asked specific questions of facts. As such, it was a general verdict with interrogatories. (C) is wrong because a directed verdict is issued by the judge, not the jury, before the case is submitted to the jury. Moreover, this type of verdict is no longer called a “directed verdict.” It is now called a “judgment as a matter of law.” Clearly, this does not apply to the facts, as the case was submitted to the jury.
A manufacturer sold to a consumer an expensive laser printer that never worked properly. Therefore, the consumer never fully paid for the printer. The manufacturer sued for specific performance of the contract of sale of the printer. The consumer filed a counterclaim for a breach of warranty, asking for $85,000 in damages. The consumer demanded a jury trial, but the manufacturer objected.
Assuming that the demand for a jury trial was timely made, how will the court rule on the availability of a jury trial?
A
For the consumer, because the underlying dispute is legal in nature.
B
For the consumer, because a defendant may always request a jury trial.
C
For the manufacturer, because it filed suit first.
D
For the manufacturer, because an action for specific performance is equitable in nature.
CORRECT ANSWER: A. For the consumer, because the underlying dispute is legal in nature.
The court will grant a jury trial because the underlying dispute is legal in nature. The court will look to the basic substance of the case to see if a jury trial is appropriate. Although the manufacturer’s suit is equitable in nature, the consumer’s counterclaim for breach of warranty is an action at law, in which a jury trial is available on demand. Thus, (D) is incorrect. (B) is an incorrect statement of law, and (C) is incorrect because filing suit first would not guarantee a jury (or nonjury) trial.
The plaintiff and the defendant are both citizens of State A. The plaintiff wished to sue the defendant in a federal court on a $100,000 claim. For this reason, and only this reason, she moved permanently to State B and filed suit in a federal court there, with jurisdiction being based on diversity of citizenship. A few days after being properly served, the defendant, after accepting a job offer from a company based in State B, moved permanently to State B.
For purposes of the plaintiff’s case, what are the citizenships of the parties?
A
Both the plaintiff and the defendant are citizens of State B.
B
The defendant is a citizen of State A, and the plaintiff is a citizen of State B.
C
The defendant is a citizen of State B, and the plaintiff is a citizen of State A.
D
Both the plaintiff and the defendant are citizens of State A.
CORRECT ANSWER: B. The defendant is a citizen of State A, and the plaintiff is a citizen of State B.
The defendant is a citizen of State A, and the plaintiff is a citizen of State B. Diversity is determined at the time the action is filed, not when the cause of action accrues or after the action commences. Also, the plaintiff’s motive for moving to State B is irrelevant, as long as the change of citizenship is genuine; i.e., she intends to remain there. The defendant’s motive is also irrelevant. Even though he moved to State B for reasons unrelated to the case and his move appears to be enough to change his citizenship, citizenship is still determined at the time the action is filed, and thus he is still considered to be a citizen of State A for purposes of this lawsuit.
A woman died, devising a parcel of land by will “to my church, to be held and enjoyed by them so long as they shall maintain and promulgate their present religious beliefs and continue as a church; and if said church shall be dissolved or if its religious beliefs shall be changed, then it is my will that the land shall go to my children, to be divided in equal portions among them.” The residuary clause of the woman’s will provides “the residue of my estate I bequeath to my children.” The common law Rule Against Perpetuities applies in this jurisdiction.
If the church dissolves, by which manner will the children take the land?
A
Under the residuary clause of the woman’s will by making an entry upon the land.
B
Under the residuary clause of the woman’s will, because a possibility of reverter is devisable.
C
By intestacy from the woman’s estate, because their executory interest violates the Rule Against Perpetuities.
D
Pursuant to their executory interest in the land.
CORRECT ANSWER: Under the residuary clause of the woman’s will, because a possibility of reverter is devisable.
Answer B is correct. The children will take the land by using the possibility of reverter that passed to them under the residuary clause of the woman’s will. In this case, the woman conveyed a fee simple subject to an executory interest to the church. While she attempted to make a gift over to her children, this was an invalid executory interest because it was unlimited in time and therefore violated the Rule Against Perpetuities. When the executory interest is stricken, the grant becomes a fee simple determinable, and the woman’s estate retains possibility of reverter. A possibility of reverter, is a future interest in a grantor and thus is not subject to the Rule Against Perpetuities. That interest is devisable and passed through the residuary clause of her will to her children. That possibility of reverter became possessory when the church dissolved. Answer A is incorrect. Once the executory interest was stricken, the church held a fee simple determinable, not a fee simple subject to a condition subsequent. The latter leaves a right of entry in the grantor, where the former leaves a possibility of reverter in the grantor. Therefore the children need not make an entry onto the land in order to take. Upon the happening of the condition, the estate is terminated and possibility of reverter immediately reverts the estate to the grantor—there is no need for making entry. Answer C is incorrect. As explained above, a possibility of reverter is not subject to the Rule Against Perpetuities. Also, that interest is devisable and passed through the residuary clause of her will to her children. That possibility of reverter became possessory when the church dissolved. Answer D is incorrect. The children’s executory interest was stricken. An executory interest is subject to the Rule Against Perpetuities, and this interest violated the Rule. This executory interest was unlimited in the time when it could become possessory and therefore vest. The church could clearly operate long beyond lives in being plus 21 years.
A farmer conveyed his farm to his son for life, then to the heirs of his daughter (a living person).
How can the interest in the heirs of the daughter be characterized?
A
Springing executory interest, if the daughter dies before the son.
B
Contingent remainder before the death of the daughter, because those who will take have not been ascertained.
C
Vested remainder, if the son dies before the daughter.
D
Contingent remainder before the death of the son, because the heirs of the daughter must survive the son in order to take.
CORRECT ANSWER: B. Contingent remainder before the death of the daughter, because those who will take have not been ascertained.
Answer B is correct. The daughter’s heirs have a contingent remainder before the daughter’s death because they have not yet been ascertained. The interest in the daughter’s heirs is a remainder because it naturally follows the life estate in the son, but it is contingent until the daughter’s death, because until her death, the heirs cannot be determined. The daughter’s heirs must survive her in order to be considered heirs. Thus, survival past the daughter’s death is a condition precedent to the vesting of this interest. Answer A is incorrect. A springing executory interest occurs when there is a gap between the time when a present possessory interest ends and the future interest becomes possessory. For example, in this case, if the son died before the daughter, there would be no heirs of the daughter at that time, because heirs are not ascertained until death. Therefore, the interest would revert to the grantor until the daughter died and her heirs were ascertained, at which time the interest would “spring” from the grantor to the heirs. This answer choice is incorrect, because there is no gap if the daughter dies before the son, for the daughter’s heirs would be ascertained at her death and would be able to take possession of the land at the son’s death. Answer C is incorrect. The interest in the “heirs” of the daughter will not vest until her death, because they are unascertained until that time. If the son predeceases the daughter, the contingent remainder held by the descendants of the daughter will be transformed into a springing executory interest which will become possessory at the death of the daughter, which is when the identity of her heirs will be determined. Therefore, the interest in the daughter’s heirs does not vest at the son’s death, because the interest is not contingent on those persons surviving the son. Rather, the interest is contingent until those persons survive the daughter. Answer D is incorrect. Although Answer D correctly states that the daughter’s heirs hold a contingent remainder, the answer choice does not correctly state why the interest is contingent. The interest is contingent because the daughter’s heirs cannot be ascertained until she dies. They need not survive the son in order to take an interest; they need only survive the daughter. At that point, their interests vest. If an heir of the daughter survives her, but predeceases the son, the heir’s interest will pass to the heir’s estate.
A man and a woman are tenants in common in a condominium. The man spent $50,000 on improvements to the condominium, which increased its market value by $30,000.
If the man sues the woman for reimbursement, what amount will he receive?
A
$30,000.
B
$25,000.
C
$15,000.
D
Nothing.
CORRECT ANSWER: D. Nothing
Answer D is correct. The man will receive nothing. A co-tenant who makes necessary repairs to property can usually recover from a noncontributing co-tenant, but a co-tenant who improves property has no right to contribution from noncontributing co-tenants. At best, he can recover the value of those improvements in an action for partition.
A landlord leased an apartment to a salesman for two years at a rent of $1200 a month. Rental payment was due on the first day of each month. The terms of the lease prohibited any assignment without written consent of the landlord.
The salesman paid rent for one year but was then transferred to another state by his employer for six months. The salesman entered into an agreement with a cousin for the cousin to move into the apartment and pay the full amount of the rent for the six months the salesman would be gone. Because the salesman was worried that he’d be too busy with his new job to remember to make the rent payments, he asked the cousin to pay the rent directly to the landlord. The cousin paid the rent for the first four months, and the landlord accepted the rent. However, the cousin did not pay any rent for the final two months.
When the salesman returned and took possession, he promptly made a payment of $1200 to the landlord. The landlord notified him that he was bringing suit for the $2400 of unpaid rent for the previous two months.
From whom can the landlord recover this amount?
A
From the cousin only, based on privity of estate.
B
From the cousin only, because the landlord consented to the sublease by accepting the four months’ rent.
C
From the salesman only, based on privity of contract and privity of estate.
D
From either the salesman or the cousin, because the lease agreement did not expressly prohibit a sublease.
CORRECT ANSWER: C. From the salesman only, based on privity of contract and privity of estate.
(C) is the correct answer. The landlord can recover from the salesman only. The transfer from the salesman to the cousin was a sublease, not an assignment, because it was for less than the entire remaining leasehold balance. In a sublease, the original tenant remains liable both in privity of contract and in privity of estate. The landlord may recover unpaid rent only from the original tenant. (A) is incorrect because there is no privity of estate between a landlord and sublessee because the sublessee does not hold the tenant’s full estate. (B) is incorrect because even if it is true, it would not allow the landlord to recover from the cousin. The problem is not the landlord’s consent; it is privity. Assuming that the landlord’s acceptance of the rent from the cousin was a waiver of a covenant against sublease, the landlord has still no privity of estate or contract with the sublessee, and thus cannot collect rent from the cousin. (D) is incorrect because, even if true, this fact would not affect the landlord’s ability to sue the cousin. If the salesman was not permitted to sublease and did so in violation of his lease with the landlord, it would not give the landlord rights against the cousin.
A landlord entered into a written residential lease with a tenant on June 1. The premises consist of a single-family house and surrounding land. The tenant paid the first and last months’ rent at the time the lease was signed. The lease term was for one year, commencing July 1. At the time the lease was signed, the premises were occupied by a writer under a lease expiring on June 30. The writer remained in possession after his lease expired, leaving only after being evicted on August 15.
What is the tenant’s best theory for a cause of action against the landlord for failure to deliver possession on or before July 1?
A
The landlord breached the covenant of quiet enjoyment, which is implied in every lease.
B
The writer’s continued possession constituted a constructive eviction of the tenant.
C
The landlord had an immediate right to possession on July 1 and should have physically removed the writer on that date.
D
The landlord negligently failed to remove the writer on or before July 1.
CORRECT ANSWER: A. The landlord breached the covenant of quiet enjoyment, which is implied in every lease.
Answer A is correct. The tenant’s best theory is that the landlord breached the covenant of quiet enjoyment. A covenant of quiet enjoyment is implied in every lease. The tenant paid rent for a term commencing July 1 and had a right to possession on that date. The landlord breached that covenant by permitting a person with a greater possessory right (e.g., a hold-over tenant at sufferance who has not yet been evicted) to deny possession to the tenant, who had a right to it. Answer B is incorrect. Constructive eviction occurs when a landlord’s breach of duty renders the premises untenantable (i.e., unsuitable for occupancy). This usually occurs when the landlord fails to repair or provide necessary services, such as heat or water. This tenant has never been in possession of the premises and thus cannot be evicted, constructively or otherwise. Answer C is incorrect. This answer choice correctly states that the landlord had a right to possession on July 1. However, it incorrectly states that the landlord should have resorted to self-help to regain possession. The writer was originally a tenant under a lease and became a tenant at sufferance at the expiration of the lease. His possession could be terminated only by a court-ordered eviction, not by self-help repossession. The tenant’s best theory is that he has a valid lease with the landlord that contains a covenant of quiet enjoyment, and that covenant was breached by the fact that someone claiming through the landlord prevented the tenant from taking possession of the premises at the start of the lease. Answer D is incorrect. A claim of negligence would not be the best argument for the tenant, because it appears that the landlord acted diligently and quickly to pursue the legal means available to remove a hold-over tenant at sufferance. The tenant should instead pursue a theory of breach of the implied covenant of quiet enjoyment, since he was denied his legal right to possession by the continued possession of the writer.
A landlord leased a 40-acre tract of land to a tenant for a 15-year period. After five years had expired, the government condemned 15 acres of the property for road construction and allocated the compensation award to the landlord and the tenant according to their respective interests. It so happened, however, that the tenant had used the 15 acres taken by the government to store vehicles necessary in the tenant’s work. The tenant knew of no other place nearby where he could store the vehicles. There is no applicable statute in the jurisdiction where the property is located, nor any provision in the lease relating to the condemnation. The tenant quit possession, claiming that he could no longer live on the premises if he could not park the vehicles needed in his work close to where he lived. The landlord brought suit against the tenant to recover rent.
Is the landlord likely to prevail?
A
Yes, because the relationship of landlord and tenant was unaffected by the condemnation, thus leaving the tenant still obligated to pay rent.
B
Yes, because of the implied warranty on the part of the tenant to return the demised premises in the same condition at the end of the term as it was at the beginning.
C
No, because there has been a breach of the implied covenant of quiet enjoyment by the landlord’s inability to provide the tenant with possession of the whole of the property for the entire term.
D
No, because there has been a frustration of purpose that excuses the tenant from further performance of his contract to pay rent.
CORRECT ANSWER: A. Yes, because the relationship of landlord and tenant was unaffected by the condemnation, thus leaving the tenant still obligated to pay rent.
The landlord likely will prevail. In a partial condemnation case, the landlord-tenant relationship continues, as does the tenant’s obligation to pay the entire rent for the remaining lease term. (B) is wrong because, while the tenant generally is obligated to return the premises in the same condition as when received, that obligation would not be considered breached by the actions of a third party such as the government. (C) is wrong because the covenant of quiet enjoyment can be breached only by actions of the landlord and not those of a third party, such as the government. (D) is wrong because the law of landlord and tenant traditionally refuses to recognize frustration of purpose as grounds for termination of a lease.
A landlord leased a portion of the lobby of his office building to a vendor under a written lease for a term of 10 years at $500 per month. The lease provided that the shop was to be used as a candy and cigarette counter, which would be the “exclusive” vending facility in the building. The lease was silent as to the vendor’s right to transfer the leasehold interest.
Later, the vendor transferred his interest to a retailer by a writing providing that the vendor could reenter if the retailer failed to make rental payments to the landlord. The landlord subsequently sold the building to an investor, who installed several automatic candy and cigarette vending machines throughout the building. As a result, the retailer’s sales declined and she refused to pay any rent.
If the investor files suit against the retailer for the rent due, how should a court following common law principles rule?
A
The investor has no direct claim against the retailer personally; his only remedy is to terminate the lease and sue the vendor for the rent.
B
The investor can recover $500 per month rent from the retailer.
C
The investor can recover nothing from the retailer because his installation of the vending machines allowed the retailer to immediately terminate her duties under the lease.
D
The investor can recover $500 per month rent from the retailer but only if the vending machines are removed.
CORRECT ANSWER: A. The investor has no direct claim against the retailer personally; his only remedy is to terminate the lease and sue the vendor for the rent.
The investor can recover $500 per month rent from the retailer. The retailer is liable to the investor for the rent because of her status as an assignee, and because at common law the rent and anticompetition covenants are independent. Absent an express restriction in the lease, a tenant may freely transfer his leasehold interest. To be an assignment, a transfer must be on the same terms as the original leasehold except that the transferring tenant may reserve a right of termination (reentry) for breach of the terms of the original lease that has been assigned. Because the vendor transferred all of his interest to the retailer, this transfer will be given effect as an assignment rather than a sublease despite the vendor’s reservation of a right of reentry. An assignee takes the place of the original tenant in a direct relationship with the landlord. The assignee and landlord are in privity of estate, so that each is liable to the other on all lease covenants that run with the land. Covenants held to run with the land include covenants to pay money. Because a covenant to pay rent runs with the land, an assignee owes the rent directly to the landlord for the time that they are in privity of estate. The investor and the retailer are in privity of estate. Thus, the burden of the vendor’s original covenant to pay rent runs with the land and binds the retailer. (A) incorrectly states that the investor has no direct claim against the retailer personally for payment of the rent. (C) and (D) are wrong because, at common law, a tenant’s duty to pay rent is considered an obligation independent of the landlord’s performance of his obligations. The landlord’s original agreement that the space leased to the vendor would be the exclusive vending facility in the building ran with the land. The provision would certainly have been intended to run with the land (it is highly doubtful that the vendor would have intended that a successor in interest to the landlord could lease space for competing vending facilities). Also, this agreement touched and concerned the leased premises because it benefited the tenant and burdened the landlord with respect to their interests in the property. The investor has breached this covenant by installing the vending machines. This breach by the investor will not, however, allow the retailer to terminate the lease or her obligation to pay rent under the lease; i.e., the retailer’s duty to pay rent is independent of the investor’s performance of his agreement that there would be no other vending facilities in the building. Thus, the investor can recover the rent payments regardless of whether the vending machines are removed, and the retailer’s remedy for the investor’s breach is to bring an action against the investor for any damages resulting from his installation of the vending machines.
If a mortgagee purports to transfer the mortgage without the note, which of the following is not a possible result?
A
The transfer would be void
B
The note would automatically follow the mortgage
C
Payment of the mortgage debt would become due in full
CORRECT ANSWER: C. Payment of the mortgage debt would become due in full.
If a mortgagee purports to transfer the mortgage without the note, payment of the mortgage debt would NOT become due in full. Rather, that would be the effect if the mortgagor transferred land subject to a mortgage containing a due-on-sale clause. Such clauses benefit the mortgagee, protecting it from the mortgagor’s sale to a poor credit risk or to a person likely to commit waste.
Mortgagees usually transfer their interests by indorsing and delivering the promissory note and executing a separate assignment of the mortgage. The note and mortgage must pass to the same person for a mortgagee’s transfer to be complete. If a mortgagee purports to transfer the mortgage without the note, some states hold that the note would automatically follow the mortgage. Other states hold that, because the note is the principal evidence of the debt, the transfer would be void.
When a mortgagee transfers a promissory note, which of the following is required for the transferee to become a holder in due course?
A
The payee must indorse the original note or a copy thereof
B
The note must not contain an acceleration clause
C
The note must provide for a fixed interest rate
D
The transferee must not have any notice that the note is overdue
CORRECT ANSWER: D. The transferee must not have any notice that the note is overdue
When a mortgagee transfers a promissory note, to become a holder in due course the transferee must not have any notice that the note is overdue or has been dishonored. The primary benefit of holder in due course status is that a holder in due course takes the note free of any personal defenses that the maker might raise and is subject only to “real” defenses, such as infancy, duress, and illegality.
When a mortgagee transfers a promissory note, for the transferee to become a holder in due course:
- The note must be negotiable in form—i.e., the note must be payable to bearer or to the order of the named payee and must contain a promise to pay a fixed amount of money (although it MAY provide for an adjustable interest rate) and no other promises (although it MAY contain an acceleration clause and an attorneys’ fee clause); 2. The named payee must indorse (i.e., sign) the original note—NOT a copy thereof; 3. The original note must be delivered to the transferee; and 4. The transferee must pay value for the note and take the note in good faith, without notice that the note is overdue or has been dishonored, or that the maker has any defense to the duty to pay it.
When a mortgagee transfers a promissory note, which of the following is required for the transferee to become a holder in due course?
A
The transferee may have notice of defenses only if the note has not been dishonored
B
The transferee must pay fair market value for the note
C
A copy of the note must be delivered to the transferee
D
The note must be payable to bearer or to the order of the named payee
CORRECT ANSWER: D. The note must be payable to bearer or to the order of the named payee
When a mortgagee transfers a promissory note, for the transferee to become a holder in due course the note must be payable to bearer or to the order of the named payee. The primary benefit of holder in due course status is that a holder in due course takes the note free of any personal defenses that the maker might raise and is subject only to “real” defenses, such as infancy, duress, and illegality.
When a mortgagee transfers a promissory note, for the transferee to become a holder in due course:
- The note must be negotiable in form—i.e., the note must be payable to bearer or to the order of the named payee and must contain a promise to pay a fixed amount of money (although it may provide for an adjustable interest rate) and no other promises (although it may contain an acceleration clause and an attorneys’ fee clause); 2. The named payee must indorse (i.e., sign) the original note; 3. The original note must be delivered to the transferee (a copy is not acceptable); and 4. The transferee must pay “value” for the note (which must be more than nominal but need not be as great as the fair market value of the note) and take the note in good faith, with NO notice that the maker has any defense to the duty to pay it or that the note is overdue or has been dishonored.
Under __________, a mortgagee may not take possession of the mortgaged property without consent upon the mortgagor’s default.
A
The intermediate theory
B
Both the lien theory and the title theory
C
The title theory
D
The lien theory
CORRECT ANSWER: D. The lien theory
Under the lien theory, a mortgagee may not take possession of the mortgaged property without consent upon the debtor’s default. A majority of the states follow the lien theory, under which the mortgagee is deemed to hold a security interest in the land and the mortgagor is considered the owner until foreclosure. Thus, the mortgagee may not take possession of the land before foreclosure unless the mortgagor consents or has abandoned the land.
Under the title theory, followed in a minority of the states, legal title is in the mortgagee until the mortgage has been satisfied or foreclosed. Thus, the mortgagee is entitled to possession upon demand at any time, which means the mortgagee can take possession as soon as the mortgagor defaults. The same is true in the few states that follow the intermediate theory; however, under this theory, legal title transfers from the mortgagor to the mortgagee on default
For which type of security interest in land does the debtor transfer title to land to a lender in exchange for a lease with an option to repurchase?
A
Right of first refusal
B
Installment land contract
C
Sale-leaseback
D
Deed of trust
CORRECT ANSWER: C. Sale-leaseback
A sale-leaseback is a security interest in land by which the debtor transfers title to land to a lender in exchange for a lease with an option to repurchase. Additional factors that will lead a court to treat the transaction as a disguised mortgage are: (i) similarity between the lease payments and payments that would be due on a mortgage loan; and (ii) the repurchase option being far below the property value, thus making repurchase very likely to occur.
A deed of trust is a security interest in land by which the debtor (i.e., the trustor) transfers title to the land to a third party (i.e., the trustee), such as the lender’s lawyer or a title insurance company, acting on behalf of the lender (i.e., the beneficiary). In the event of default, the lender instructs the trustee to foreclose the deed of trust by selling the property.
An installment land contract is a security interest in land in which the debtor (i.e., the buyer) contracts with the seller to pay for the land in regular installments until the full contract price has been paid, plus interest. Only then will the seller transfer legal title to the buyer. The contract may contain a forfeiture clause providing that the seller may cancel the contract upon default, retain all money paid, and retake possession of the land.
A right of first refusal is not a security interest in land. It is the holder’s preemptive right to purchase property only if the seller accepts a third party’s offer to purchase, and usually on the same terms as that offer.
A purchase money mortgage (“PMM”), whether recorded or not, generally will have priority over __________.
A
all other mortgages and liens
B
a subsequent recorded non-PMM against the same mortgagor
C
a prior claim against the same mortgagor arising before the mortgagor acquired title
D
no other mortgages or liens
CORRECT ANSWER: C. a prior claim against the same mortgagor arising before the mortgagor acquired title
A purchase money mortgage (“PMM”), whether recorded or not, generally will have priority over a prior claim against the same mortgagor arising before the mortgagor acquired title. A PMM is a mortgage given to (i) the vendor of the property as a part of the purchase price, or (ii) a third party who lends funds to allow the buyer to purchase the property. A PMM has priority over such prior claims even if those other mortgages or liens are recorded first.
A PMM that was not recorded generally will not have priority over a subsequent recorded mortgage or lien, such as a non-PMM, against the same mortgagor. PMM priority may be defeated by subsequent mortgages or liens by normal operation of the recording acts. In general, if a first mortgagee fails to record and the second mortgagee records, gives value, and takes without notice of the first, any recording act will give the second mortgagee priority over the first. Thus, a PMM does not have priority over all other mortgages and liens. Furthermore, as between a vendor PMM and a third-party PMM, the vendor’s usually is given priority.
If a grantor transfers a deed in exchange for cash, and the grantee promises to return the land when the cash is repaid, a court will likely treat the transaction as:
A
An installment land contract
B
A deed of trust
C
An equitable mortgage
D
A conveyance
CORRECT ANSWER: C. An equitable mortgage.
If a grantor transfers a deed in exchange for cash, and the grantee promises to return the land when the cash is repaid, a court will likely treat the transaction as an equitable mortgage and not as a conveyance of the land outright. In determining whether the parties intended the transfer only to serve as security for an obligation, the court will consider:
(i) The existence of a debt or promise of payment by the grantor; (ii) The grantee’s promise to return the land if the debt is paid; (iii) Whether the amount advanced to the grantor was much lower than the value of the property; (iv) The degree of the grantor’s financial distress; and (v) The parties’ prior negotiations.
If the court concludes that the deed was given as security, the grantee-creditor must foreclose it like any other mortgage.
A deed of trust is a security interest in land by which the debtor (i.e., the trustor) transfers title to the land to a third party (e.g., the lender’s lawyer or a title insurance company) as trustee for the lender ( i.e., the beneficiary). In the event of default, the lender instructs the trustee to foreclose the deed of trust by selling the property.
An installment land contract is a security interest in land by which the debtor agrees to make regular installment payments until the full contract price (including interest) has been paid. Only then will the vendor transfer legal title to the debtor. In the event of default, the contract may contain a forfeiture clause providing that the vendor may cancel the contract, retain all money paid to date, and retake possession of the land.
Which correctly states the order of priority for allocating mortgage foreclosure sale proceeds, from first to last?
A
The foreclosing party, any junior lienors in the order of their priority, and then the mortgagor
B
The foreclosing party, any senior lienors in the order of their priority, and then the mortgagor
C
The foreclosing party, any senior lienors in the order of their priority, and then any junior lienors in the order of their priority
D
Any senior lienors in the order of their priority, the foreclosing party, and then any junior lienors in the order of their priority
CORRECT ANSWER: A. The foreclosing party, any junior lienors in the order of their priority, and then the mortgagor
The order of priority for allocating mortgage foreclosure sale proceeds is as follows, from first to last: 1. Expenses of the sale, including attorneys’ fees, and court costs; 2. The principal and accrued interest on the foreclosing party’s loan; 3. Any junior lienors in the order of their priority; and then 4. The mortgagor. In many cases, no surplus remains after the principal debt is paid off. Senior lienors receive none of the proceeds. Because a senior lien remains on the property (i.e., may itself be foreclosed in the future), a senior lienor is not entitled to any of the money from the sale, even if there is a surplus.
