Mixed Questions - Set 14 Flashcards
A landlord brought suit against a tenant in federal court for overdue rent payments on a commercial lease. The landlord sought to recover on the six rent installments that were past due and unpaid at the time of the suit. The landlord won the case, and judgment was entered in her favor. The lease has an acceleration clause that states that all future rent payments become due if the tenant falls behind three months or more. The landlord now files suit against the tenant for the remaining rent payments. The tenant moves to dismiss, asserting that the landlord’s claim is barred by claim preclusion (res judicata) principles.
Should the tenant’s motion to dismiss be granted?
A No, because a landlord may choose when to sue on an acceleration clause.
B No, because the two suits do not involve the same cause of action.
C Yes, because a landlord may not sue on later installments of an installment contract.
D Yes, because the two suits arose out of the same transaction or occurrence.
D
The plaintiff’s suit is unlikely to be successful because the two suits arise out of the same transaction or occurrence. Claim preclusion (res judicata) requires that (i) a valid, final judgment on the merits was entered in the first case; (ii) the cases were brought by the same claimant against the same defendant; and (iii) the same cause of action is involved in the later lawsuit. Generally, a claimant is required to assert all causes of action arising out of the same transaction or occurrence that is the subject matter of the claim. In the situation of installment payments, the claimant is required to sue on all installments due at the time of the suit. If there is an acceleration clause, the claimant must sue for all installments. Here, the plaintiff should have sued for all installments in the first lawsuit. Because she did not, her second suit is barred by claim preclusion. (A) is incorrect because a plaintiff may not choose when to sue on an acceleration clause. If there is a nonoptional acceleration clause in the contract, the plaintiff must sue for all installments in her original lawsuit. (B) is incorrect because the two suits do involve the same cause of action. They arise out of the same transaction or occurrence, i.e., the lease. (C) is incorrect because, although usually a plaintiff may only sue on the installments due at the time of the suit, she must sue for all installments if there is an acceleration clause.
An environmental group, wishing to stop the issuance by a federal agency of a mining permit to a coal company, commences an action in federal court against the federal agency, seeking, among other things, a permanent injunction barring the issuance of the permit to the coal company.
If the coal company seeks to join the litigation as a matter of right, must the federal court grant the motion?
A No, because intervention of outside parties is a matter within the sole discretion of the judge.
B No, unless the coal company has been given an unconditional right to intervene by a federal statute.
C Yes, because the coal company has an interest in getting the mining permit.
D Yes, unless the court concludes that the coal company’s interest in getting the permit is adequately protected by the federal agency.
D
Under Rule 24, a nonparty may intervene in an action as a matter of right in two situations. First, a nonparty may intervene when it has an unconditional right to do so by a federal statute. Second, a nonparty may intervene if (i) it has an interest in the property or transaction the is the subject matter of the action; (ii) the disposition or resolution of the action may as a practical matter impair the nonparty’s ability to protect its interest; and (iii) the nonparty’s interest is not adequately protected by an existing party in the action. Here, although no federal statute gives the coal company the right to intervene, it does have an interest at stake in the action-its interest in getting the mining permit issued to it-and its ability to obtain the permit will as a practical matter be impaired if the environmental group succeeds in getting an injunction against its issuance. Thus, the coal company should be allowed to intervene unless the court concludes that the federal agency adequately represents the coal company’s interest. (A) is incorrect because Rule 24(a) provides that the court must allow a party to intervene as of right under the circumstances described above. (B) is incorrect. Although the coal company has no right to intervene by federal statute, it may nonetheless intervene as of right if it meets the standard discussed above. Moreover, the court may allow it to intervene permissively under Rule 24(b) if it believes that the coal company “has a claim or defense that shares with the main action a common question of law or fact.” (C) is incorrect because although the coal company has an interest in the action, it may not intervene as of right if the court concludes that its interest is adequately protected by the federal agency.
A corporation was in the business of purchasing real property at below-market prices and reselling the properties to investors. The bylaws of the corporation authorized the chief executive officer (“CEO”) and the director of the marketing division to enter into contracts on behalf of the corporation for the purchase or sale of properties. The corporation had recently purchased a large parcel of beachfront property for resale. The CEO secretly opened negotiations with an amusement park to sell the property. However, unknown to the CEO or anyone else in the corporation, the marketing director had already reached an agreement with a hotel for the sale of the property.
On April 23, the marketing director and the hotel signed a written contract providing for sale of the property by the corporation to the hotel for $35 million. On April 25, the board of directors amended its bylaws, effectively depriving the marketing director of authorization to bind the corporation in purchase or sale transactions. This action was immediately publicized and became known to both the marketing director and the hotel. On April 26, the hotel duly recorded its contract. On May 1, the CEO, still unaware of the marketing director-hotel agreement, approved sale of the property to the amusement park for $39 million. The necessary documents of title were prepared and properly recorded by the amusement park on May 5. Two days later, the amusement park learned of the marketing director-hotel agreement. On May 10, the date scheduled for closing of the hotel’s sale agreement, the CEO refused to accept the hotel’s tender of $35 million and refused its demand for a deed to the property.
The hotel subsequently brings action against the corporation and the amusement park for specific performance and to quiet title to the property. For whom will the court likely rule?
A The defendants, because the board of directors had deprived the marketing director of authority to bind the corporation in the sale of real property.
B The defendants, because the amusement park is the only purchaser who properly recorded a deed to the property.
C The hotel, because the amusement park had constructive notice of the hotel’s interests in the property when the agreement with the CEO was made.
D The hotel, because the attempt to divest the marketing director of authority to approve sales of the corporation’s property was invalid.
C
Judgment should be for the hotel regardless of whether the jurisdiction has a notice statute or a race-notice statute. Under either type of recording statute, the only persons protected by the statute are bona fide purchasers. To attain this status, the person must take without notice-either actual, constructive, or inquiry-of the prior instrument. Because the marketing director-hotel contract was properly recorded, the amusement park had constructive notice of the hotel’s interest in the property. Thus, the park could not become a bona fide purchaser when it entered into its contract. (A) is wrong because the marketing director had not been deprived of authority to bind the corporation at the time she signed the agreement with the hotel, and any subsequent change in her powers did not affect the validity of that agreement, nor the hotel’s power to subsequently record the agreement. (B) is wrong because the hotel recorded its contract of sale. Any instrument creating or affecting an interest in land (e.g., deed, mortgage, contract to convey) can be recorded, providing constructive notice to subsequent purchasers. Thus, the hotel’s failure to record a deed does not deprive it of protection of the recording statute. (D) is wrong because regardless of the validity of the board’s attempt to divest the marketing director of authority, it is immaterial to the hotel’s rights; it came after the valid marketing director-hotel contract was properly signed by the marketing director.
A developer owned a 240-acre parcel of land zoned for commercial and residential use. He prepared and recorded, after obtaining approval from all appropriate agencies, a subdivision plan that included a commercial center and a number of lots for single- and multi-family residences. The list of covenants, conditions, and restrictions recorded with the plan included provisions that required every building constructed in the subdivision to be of “simulated adobe style” architecture approved in advance by an association. A year later, the developer sold many of the lots in the commercial center, including several to a real estate firm. Each deed prepared by the developer contained a reference to the design restriction in the recorded plan. The developer also sold almost all of the residential lots, the deeds of which contained the same reference to the restriction. The following year, the real estate firm sold one of its lots to a burger franchise. The deed contained no reference to the design restriction. The franchise’s prefabricated restaurant, complete with a giant burger logo mounted on the roof, was constructed over the weekend.
A merchant, an original purchaser of one of the commercial lots, owned the lot next to the burger franchise. She did not learn of construction of the restaurant until she came in to work on Monday, and saw the giant burger logo. The merchant brings an action seeking a mandatory injunction compelling the burger franchise to demolish the restaurant. At trial, the merchant proves that the burger franchise did not seek or obtain approval of the association for its building.
Should the court issue the injunction?
A No, because destruction of the restaurant would be a tremendous waste of resources.
B No, because the burger franchise’s deed contained no restriction on the type of building that could be constructed on the lot.
C Yes, because the restrictive covenant runs with the land.
D Yes, unless the burger franchise can establish to the court’s satisfaction that its restaurant design has at least as much aesthetic merit as any “simulated adobe style” design.
C
The court should issue the injunction because the covenant runs with the land. A covenant will be enforceable as an equitable servitude-allowing a covenantee, covenantor, or successor to enforce the covenant in equity by way of injunction-when there is (i) a covenant in a writing satisfying the Statute of Frauds, that (ii) touches and concerns the land (i.e., the effect of the covenant makes the land more useful or valuable to the benefited party) and that (iii) indicates an intention that the servitude exists, and (iv) notice is given to future owners of the burdened land. Here, the covenant was in writing in the subdivision plan and presumably it satisfied the Statute of Frauds. It touches and concerns the land-benefiting all of the lots and burdening all of the lots. The intention to create the servitude is established by the writing and can also be implied from the common scheme for development. There was sufficient record notice of the covenant because the plan was recorded and was noted in all of the original deeds prepared by the developer, including the one in the burger franchise’s chain of title. Thus, the covenant is enforceable and (C) is the best answer. (A) is incorrect because although an injunction is equitable in nature-so equitable principles govern-it is not a defense in equity merely to claim that granting an injunction will result in a waste of assets. (B) is incorrect because the burger franchise had record notice of the restriction. The deed from the developer to the real estate firm, which contained a reference to the restriction in the recorded plan, was in the burger franchise’s direct chain of title and could have been discovered by it. (D) is incorrect because a court will not modify the covenant-it will enforce it or not enforce it, but will not substitute its judgment of what is aesthetically pleasing for the requirements of the covenant.
A defendant is on trial for violating a statute forbidding possession of a concealed weapon within 100 yards of a government building. The prosecution presents evidence that the defendant was arrested on a street corner with a handgun in his pocket. The building housing the local city hall occupies the entire block on the north and east sides of the two streets where the defendant was apprehended.
Which of the following statements is most accurate regarding judicial notice of the location of the city hall?
A The judge may take judicial notice of this fact without resort to a map, and should instruct the jury that it may, but need not, accept this fact as evidence of an element of the offense.
B The judge may take judicial notice of this fact only upon reference to an official street map of the city.
C The judge may not take judicial notice of this type of fact in a criminal case without a request by the prosecution.
D If the judge properly takes judicial notice of this fact, a presumption is created that shifts the burden of persuasion to the defendant to disprove this fact.
A
The judge may take judicial notice of this fact because it is a matter of common knowledge in the community, but the jury is not required to accept the fact as conclusive in a criminal case. Judicial notice may be taken of facts that are not subject to reasonable dispute because they are generally known within the territorial jurisdiction of the trial court. [Fed. R. Evid. 201(b)] The facts need not be known everywhere as long as they are known in the community where the court is sitting. The location of the city hall is such a fact. As choice (A) also states, in a criminal case the jury should be instructed that it may, but is not required to, accept as conclusive any fact that is judicially noticed. [Fed. R. Evid. 201(f)] (B) is incorrect. While facts that are not generally known and accepted may be a subject of judicial notice if they are easily verified by resorting to easily accessible, well-established sources (i.e., facts capable of certain verification), facts that are matters of common knowledge in the community, such as the location of the city hall, may be judicially noticed without resort to reference materials. (C) is incorrect because a judge can take judicial notice of matters of common knowledge at any time, whether or not requested by a party, regardless of whether a criminal or civil case is involved. (D) is incorrect because a “presumption” in a criminal case is nothing more than a permissible inference that the jury may make. Because the accused in a criminal case is presumptively innocent until the prosecution proves every element of the offense beyond a reasonable doubt, the burden of persuasion is not shifted to the defendant by a “presumption” or by a fact that has been judicially noticed.
A plaintiff sued a defendant in a contract dispute. The plaintiff calls a witness to testify as to his personal knowledge of the agreement. The plaintiff now wants a second witness to testify as to her knowledge of the first witness’s honesty. The defendant objects and the court sustains the objection.
Why is the testimony of the second witness inadmissible?
A The first witness’s credibility has not been questioned.
B It would be inadmissible under the hearsay rule.
C The second witness may not testify as to an opinion.
D Character evidence is generally inadmissible in civil cases.
A
The plaintiff may not call the second witness to testify about the first witness’s honesty because his credibility has not been questioned. Generally, a party may not bolster or accredit the testimony of her witness until the witness has been impeached. [Fed. R. Evid. 608(a)] Here, the defendant has not tried to cast any adverse reflection on the first witness’s truthfulness (i.e., he has not been impeached). Thus, the second witness’s testimony as to her knowledge of the first witness’s honesty will not be allowed. (B) is incorrect because these facts do not present a hearsay problem. Hearsay is an out-of-court statement offered in evidence to prove the truth of the matter asserted. [Fed. R. Evid. 801(c)] The second witness’s testimony will relate only to her knowledge of the first witness’s honesty; the second witness will not be testifying as to a statement made by an out-of-court declarant. Consequently, her testimony does not involve hearsay. (C) is incorrect because the credibility of a witness may be supported (if impeached) or attacked by opinion or reputation evidence regarding the witness’s truthfulness. [Fed. R. Evid. 608(a)] Thus, if the first witness’s honesty had been attacked by the defendant, the second witness could testify as to her opinion of the first witness’s character for truthfulness or as to his reputation for honesty. (D) is incorrect because, although evidence of character of a person in a litigated event is generally inadmissible in civil cases (except where character itself is an essential element of a claim or defense in the case), opinion or reputation testimony about a witness’s character for truthfulness is generally admissible for purposes in both civil and criminal cases.
A state legislature enacted a statute providing for loaning certain textbooks on secular subjects to students in all public and private schools. In accordance with the statute, the state board of education distributed textbooks to a private school that offered religious instruction and admitted only Caucasian students.
Which of the following is the strongest argument against the constitutionality of free distribution of textbooks to the students at the private school?
A A state may not constitutionally aid private schools through distribution of textbooks.
B Segregation is furthered by the distribution of textbooks to these students.
C The distribution of textbooks advances religion because it is impossible to separate their secular and religious uses.
D The distribution of textbooks fosters excessive government entanglement with religion.
B
The strongest argument is that state provision of textbooks to the segregated private school violates the Equal Protection Clause by giving state support to a racially segregated educational process. This may not be a winning argument but it is clearly the best of the lot. (A) is wrong because it is far too broad. A state may, under many situations, aid a private school through distribution of textbooks. This may be permissible even if the private school is religiously affiliated, as discussed below. (C) and (D) are parts of the test for violation of the Establishment Clause. The Supreme Court has held that a state lending textbooks on secular subjects to all students, including those at religious schools, does not violate the Establishment Clause. Thus, (C) and (D) are incorrect.
The United States was involved in a dispute with a small island nation over the ownership of an archipelago. On discovering that the archipelago was rich in oil, the President announced that he would appoint an ambassador to negotiate a treaty with the island nation to jointly exploit the oil reserve. A majority of Senators believed that the island clearly belonged to the United States and did not want to negotiate with the island nation. They passed a resolution requiring the President to include a Senator in his diplomatic mission to ensure that the Senate’s view was presented in any negotiation with the island nation.
What is the strongest constitutional ground for the President’s refusal to do so?
A As commander in chief, the President has the exclusive power to determine how to protect our national interest abroad.
B The resolution is unreasonable because it includes a Senator and not any Representatives.
C The President has the exclusive power to select diplomatic representatives of the United States.
D The Senate, if it does not like the President’s actions, can refuse to appropriate the necessary monies for the President to implement his policies.
C
The President’s strongest argument is that the power to select ambassadors is vested by the Constitution in the President, and the Senate’s only power in this respect is to advise and give (or withhold) its consent. The Senate is not given the power to force ambassadors on the President. (A) is not a strong argument because the President’s power as commander in chief is not involved here. That power involves the President’s role as the supreme military leader, and military issues are not involved under the facts. (B) is not a strong argument because as far as foreign relations are concerned, the Senate does have more powers than the House. As stated above, ambassadors may be selected only with the advice and consent of the Senate, and the President’s treaty power is also similarly limited. Thus, but for the fact that the resolution is not within the Senate’s power to enforce, it would be appropriate to exclude the House from participating, because foreign affairs are involved. (D) may be a true statement, because Congress controls appropriations, but it is not a strong argument because it merely states that the Senate has another remedy (i.e., besides forcing an ambassador on the President), and the fact that the Senate has another method for achieving its goals has no bearing on whether its action here is permissible.
A defendant was convicted in federal court of possession of one kilogram of heroin with intent to distribute. She was sentenced to a prison term. Subsequently, the defendant was indicted by a federal grand jury for conspiracy to distribute the same kilogram of heroin. She moved to dismiss the indictment.
Should her motion be granted?
A No, because the Double Jeopardy Clause does not apply when the second prosecution is for violation of a separate statute.
B No, because each prosecution requires proof of an element that the other does not.
C Yes, because the Double Jeopardy Clause protects her against a second prosecution for the same criminal conduct.
D Yes, because the Due Process Clause protects her against double punishment for the same criminal conduct.
B
The defendant’s motion should be denied because a prosecution for conspiracy is distinct from a prosecution for any substantive offense involving the same conduct as the conspiracy. The Fifth Amendment provides that no person shall be twice put in jeopardy for the same offense. The general rule is that two crimes do not constitute the same offense if each crime requires proof of an additional element that the other crime does not require, even though some of the same facts may be necessary to prove both crimes. [Blockburger v. United States (1932)] Furthermore, a prosecution for conspiracy is not barred merely because some of the alleged overt acts of that conspiracy have already been prosecuted. [United States v. Felix (1992)] Here, both the conspiracy charge and the possession charge require proof of an element that the other charge does not; hence, there is no double jeopardy problem with the indictment. (A) is incorrect because it is too broad a statement. The fact that separate statutes are involved does not establish that these are not the “same offense” for purposes of double jeopardy. (C) is incorrect because the “same conduct” test is not currently used by the Supreme Court to evaluate a double jeopardy claim. (D) is incorrect because the question involves the defendant’s motion to quash an indictment and not her ultimate punishment.
At a waterfront bar, a college student sought to provoke a fight with a merchant seaman by making insulting remarks. Eventually the seaman had had enough and threw a punch that connected to the student’s jaw and sent him sprawling to the floor. The seaman then told the student that he wanted no further trouble. Getting up off the floor, the student pulled a knife out of his pocket and charged at the seaman. Three other students were standing between the seaman and the exit door. The seaman tried to dodge, but was cut on the forearm by the student’s knife. The seaman immediately drew a gun and shot the student, killing him. The seaman was charged with murder.
Which of the following points raised in the seaman’s defense will not be helpful for his defense?
A The student had no reason to fear serious bodily injury when he drew the knife.
B The student’s drawing of the knife constituted an escalation of the fight.
C Three college students were standing between the seaman and the door, so there was no clear route of retreat.
D The student’s comments were motivated by a desire to provoke the seaman.
D
Even though the student’s words may have been intended to provoke the seaman, this fact alone would not justify the seaman’s use of deadly force. A person may use deadly force in self-defense if he: (i) is without fault; (ii) is confronted with unlawful force; and (iii) reasonably believes that he is threatened with imminent death or great bodily harm. Generally, one who is at fault for starting a confrontation has no right to use force in his own defense during that confrontation. However, if the victim of the initial aggression suddenly escalates a relatively minor fight into one involving deadly force and does not give the aggressor a chance to withdraw or retreat, the aggressor may use deadly force in his own defense. Here, although the student instigated the hostile situation by repeatedly insulting the seaman, the seaman’s throwing of a punch probably calls for his being characterized as the aggressor. The student, as the victim of the initial aggression, escalated matters by using a knife, especially because the seaman had said that he wanted no further trouble. This escalation (which is the point stated in choice (B)) entitled the seaman to employ deadly force in his own defense against the imminent threat of death or great bodily harm posed by the student’s use of the knife. Thus, (B) presents a point that will be helpful to the seaman. (A) is incorrect because, if the student had no reason to fear serious bodily injury when he drew the knife, his use of the knife constitutes unlawful force, in response to which the seaman was entitled to use deadly force of his own. Consequently, (A) will also be of value in gaining the seaman an acquittal. Regarding (C), many courts hold that a person is not under a duty to retreat before using deadly force. Thus, even if the seaman could have safely retreated, he was still entitled to use deadly force in self-defense, so that he is not required to show why he did not retreat. Other courts, however, do require retreat before the use of deadly force, but only if the retreat can be made in complete safety. The fact that the seaman’s route of retreat was blocked by other students would indicate that a retreat might not be able to be made in safety, and would be significant in a jurisdiction holding that there is a duty to retreat. Therefore, (C) also presents a point that can be helpful to the seaman. (D) is correct because the motive of the student in insulting the seaman is of no help to the defense. Even if the words did provoke him, the seaman would not be entitled to employ deadly force against the student on the basis of the student’s desire for trouble. Use of such force would be justified only if the seaman held a reasonable belief that he was faced with imminent death or great bodily harm from one of the students if he did not respond with deadly force.
A driver and his passenger were involved in an automobile accident when the driver ran a red light and crashed into another car. Due to a manufacturing defect in the automobile’s airbag system, the passenger side airbag did not deploy. The passenger was killed on impact. The passenger’s estate brought suit against the driver and the airbag’s manufacturer. At trial it is established that the driver was negligent in running the red light.
What effect would such proof have on the claim of the passenger’s estate against the airbag manufacturer?
A It would reduce recovery by the estate if the action against the manufacturer is based on negligence.
B It would bar recovery by the estate if the trier of fact finds that the driver was the sole legal cause of the passenger’s death.
C It would bar recovery by the estate if it is shown that the driver is the sole legal heir of the passenger’s estate.
D It would have no effect on recovery by the estate as long as the action against the manufacturer is based on strict liability.
B
The driver’s negligence would bar recovery if it was the sole legal cause of the passenger’s death. Regardless of the theory that the plaintiff is using in a products liability action, actual and proximate cause must be established. If the driver’s negligence is the sole legal or proximate cause of the passenger’s death, it would preclude the estate’s suit against the airbag manufacturer because the defect was not a legal cause of the passenger’s death. (A) is incorrect because the driver’s contributory negligence will not be imputed to the passenger; hence, it will not reduce the estate’s recovery under comparative negligence rules. (C) is incorrect. A potential beneficiary who was negligent will be subject to the jurisdiction’s fault rules. Hence, his negligence will reduce his recovery under pure comparative negligence rules but will not bar it, even if he is the sole heir. (D) is incorrect. In most pure comparative negligence jurisdictions, the same comparative fault rules will apply whether the action against the manufacturer is based on negligence or strict liability. As discussed above, whether the estate can recover, and the extent of its recovery, depends on causation issues and the driver’s status as a beneficiary of the estate.
A fashion student at a prestigious fashion design school bought a new sewing machine for $1,000 so that she would be more than adequately equipped for her design assignments. One day, her roommate loaned the sewing machine to their neighbor, as she had done on several prior occasions. Unfortunately, the neighbor caused extensive damage to the machine. The cost to repair the sewing machine was $400.
If the fashion student sues her roommate for the damage the neighbor caused to the sewing machine, what will be the result?
A The fashion student will recover $1,000.
B The fashion student will recover the fair market value of the sewing machine.
C The fashion student will recover $400.
D The fashion student will recover nothing, because her roommate did not damage the machine and the neighbor’s conduct was not intentional.
B
The fashion student will recover the fair market value of the machine because her roommate is liable for conversion. Conversion is the intentional interference with the plaintiff’s right of possession in the chattel that is serious enough to warrant that the defendant pay the full value of the chattel. Conversion will be found if the defendant was using the chattel without permission and it was accidentally damaged, as in this case. The remedy for conversion is the fair market value of the chattel at the time and place of conversion. Thus, (B) is correct and (A) is incorrect. (C) is incorrect because that would be the remedy for trespass to chattels, which is a less serious interference than conversion. Here, an unauthorized use that resulted in damages equaling almost half the chattel’s original cost is too serious an interference in nature and consequences to be only trespass to chattel. (D) is incorrect because her roommate’s lending the sewing machine without permission satisfies the intent requirement. Even though the damage was accidental, her roommate is liable for conversion.
A manufacturer of down coats and jackets entered into a written agreement with a distributor, whereby the distributor agreed to distribute the manufacturer’s products statewide for a one-year period to begin on June 1. Before the manufacturer signed the distribution contract with the distributor, the distributor told the manufacturer that their deal was exclusive, but nothing to that effect was in the written agreement. However, in the outerwear industry it has been a custom for many years for distributors to distribute only one brand of outerwear.
On September 1, the distributor began distributing coats and jackets manufactured by one of the manufacturer’s chief competitors. These coats and jackets were sewn with man-made fabrics, were as warm as the manufacturer’s jackets, and were less bulky. The competitor’s advertising campaign throughout the state emphasizes that “you don’t have to look fat to stay warm.” Seasonally adjusted sales figures showed that the manufacturer’s sales in the state dropped 6% after its competitor’s products were introduced.
The manufacturer of the down coats and jackets complained to the distributor, demanding that it stop distributing the man-made coats and jackets made by the manufacturer’s competitor. The distributor refused, and the manufacturer of the down coats and jackets brought suit against the distributor.
Which of the following facts would provide a basis for the manufacturer’s best case against the distributor?
A The competitor’s advertising campaign throughout the state alluding to the unattractive bulkiness of the manufacturer’s coats and jackets.
B The 6% drop in seasonally adjusted sales figures in the state after the competitor’s products were introduced.
C The distributor’s oral statement to the manufacturer about their deal being exclusive.
D The long-standing custom in the outerwear industry for distributors to distribute only one brand of outerwear.
D
Of all the alternatives listed, (D) is the only one that presents any real basis for supporting the manufacturer’s case. One of the general rules of contract construction, including contracts for goods under the UCC, is that courts will look to see what custom and usage are in the particular business and in the particular locale where the contract is either made or to be performed. The manufacturer could claim that when he and the distributor entered into the distribution contract, both parties implicitly understood that the custom of distributing only one brand of outerwear would be followed in their transaction. Under such circumstances, the manufacturer may be able to successfully assert that the distributor’s distribution of the competitor’s outerwear constitutes a breach of contract. The fact that the competitor’s advertising campaign at least impliedly denigrates the appearance of the manufacturer’s outerwear (as in (A)), or that the manufacturer’s sales have dropped since the introduction of the competitor’s products (as in (B)), establishes no cause of action against the distributor. Absent some provision in the contract, or some reference to custom and usage as mentioned in (D), there is no basis for holding that the distributor was prohibited from distributing other companies’ products, or that the distributor can be held liable for a decline in the manufacturer’s sales figures due to sales or advertisements made by a company whose products are being distributed by the distributor. (C) is incorrect because the written agreement between the distributor and the manufacturer would probably be deemed to be a final expression of the bargain, so that evidence of the distributor’s prior expression would be inadmissible to vary or supplement the writing under the parol evidence rule. Under UCC section 2-202, a party cannot offer consistent additional terms if the writing was intended as a complete statement of the terms of the agreement. (In contrast, evidence of custom in the trade can be offered regardless of the completeness of the written agreement.) Also, the distributor’s statement about their deal being exclusive is not specific enough on its face to establish whether he meant that the distributor would distribute only the manufacturer’s products, or that the manufacturer would have its products distributed in the state only by the distributor, or perhaps some other meaning. The statement, even if admissible, is not definite enough to form a basis for a cause of action against the distributor.
In an attempt to induce her niece to improve her grades, an aunt told her niece that she would give her $50 for every “A” she earned in law school. Inspired by the opportunity to earn extra spending money, the niece studied like never before and ended up earning three “A’s” the following semester. Upon contacting her aunt with the news, the niece learned that her aunt was “only kidding” about paying her for every “A” earned in law school.
If the aunt’s offer to her niece was held to be valid, it would be an offer for what type of contract?
A A bilateral contract.
B A unilateral contract.
C A bilateral contract or a unilateral contract, according to the offeree’s intentions.
D A unilateral contract that became a bilateral contract when the niece began to perform.
B
The aunt’s offer to her niece was for a unilateral contract. In a unilateral contract, acceptance of an offer is possible only by performing a stipulated act, whereas in a bilateral contract, acceptance of an offer is accomplished by promising to do the stipulated act. The aunt’s offer could be accepted by the niece only by completion of performance (i.e., obtaining an “A” in the class), and when the niece received her three “A’s,” a unilateral contract was formed. Thus, (B) is correct and (A) and (C) are incorrect. (D) is incorrect because acceptance of an offer by performance of the stipulated act creates a unilateral contract, and such performance does not convert the contract into a bilateral contract, which is created by a promise to perform rather than by performance itself.
