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REMEDIES [GA] Flashcards

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1
Q

TYPES OF EQUITABLE REMEDIES

A
  1. Injunctive Relief Against Tortious Conduct;
  2. Specific Performance
  3. Rescissioin
  4. Reformation
  5. Constructive Trust
  6. Equitable Liens & Mortgages.
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2
Q

T/F: THERE IS AN ABSOLUTE RIGHT TO EQUITABLE RELIEF?

A

FALSE.

This makes it different from a legal remedy which issues as a matter of right.

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3
Q

WHEN WILL AN EQUITABLE REMEDY NOT BE GRANTED?

A

If the harm caused by granting the remedy will greatly outweigh the benefit that the moving party would recieve.

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4
Q

T/F: THERE IS A RIGHT TO JURY TRIAL IN EQUITY?

A

FALSE. (GENERALLY).

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5
Q

WHAT MUST A PLAINTIFF SHOW TO OBTAIN INJUNCTIVE RELIEF?

A
  1. The legal remedy is inadequate
  2. A property right or at least a protectable interest is involved.
  3. Enforcement of an equitable decree would be feasible, practicable, and effective to vindicate Plaintiff’s rights
  4. The hardship to D or public (where relevant) does not greatly outweigh the benefit that the plaintiff may get from the relief sought.
  5. No defenses are available.
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6
Q

WHAT KIND OF Jx IS REQUIRED FOR INJUNCTIVE RELIEF?

A

Personal Jx over the DEFENDANT is required for injunctive relief.

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7
Q

HOW TO EQUITY COURTS ENFORCE INJUNCTIONS?

A

By holding a noncomplying party in contempt.

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8
Q

CLASSIFICATIONS OF INJUNCTIONS (4)

A
  1. Mandatory (ordering that osmething be done);
  2. Negative (ordering that something not be done);
  3. Interlocutory (Temporary);
  4. Permanent.
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9
Q

WHO IS BOUND BY AN INJUNCTION?

A
  • An injunction binds the parties, their agents who receive notice, and anyone else who has notice of the injunction and is acting in concert or collusion with the parties and their agents.
  • Note* A person may not be held in contempt for violating an injunction unless she has received some form of notice of the injunction.
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10
Q

HOW LONG DOES AN INJUNCTION LAST?

A
  • An injunction must be followed until it is vacated or modified by the courts, even if appears to have been erroneously granted, unless the court was w/out Jx.
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11
Q

INJUNCTIVE RELIEF AGAINST NUISANCE

A
  • Consider the balance of hardships
  • Injunctive relief against nuisnace will generally be granted only against a private nuisance;
  • An individual will not have the right to enjoin a public nuisance unless he can show that he has standing to sue (e.g., a special injury).
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12
Q

INJUNCTIVE RELIEF AGAINST TRESPASS TO LAND

A
  • Consider the balance of hardships

- Injunctive relief is proper where the trespass is continuous

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13
Q

INJUNCTIVE RELIEF AGAINST WASTE

A
  • If waste exists, is it destructive, permissive, or ameliorative?
  • Generally, equity will not grant injunctive relief in ameliorative waste situations.
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14
Q

INJUNCTIVE RELIEF FOR CONVERSION OF OR TRESPASS TO CHATTELS

A
  • These torts involve interference w/ an owner’s’ interest in a chattel.
  • Injunctive relief is proper where the interference is continuous or the converted chattel is unique.
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15
Q

INJUNCTIVE RELIEF FOR DEFAMATION

A

Remember that equity courts are heseitant to enjoin mere libel or slander b/c of free speech rights.

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16
Q

INJUNCTIVE RELIEF FOR INVASION OF RIGHT OF PRIVACY

A

Consider potential free speech problems if a “publican” is involved.

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17
Q

INJUNCTIVE RELIEF FOR UNFAIR COMPETITION - TRADE LIBEL

A

Courts are more likely to enjoin trade libel when the inflammatory statement aimed at another’s business is connected w/ conduct amounting to unfair competition.

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18
Q

INJUNCTIVE RELIEF FOR UNFAIR COMPETITION - INDUCING BREACH OF CONTRACT AND/OR REFUSAL TO DEAL

A

An injunction is generally proper when a defendant encourages someone to breach a contract with, or refuse to do business with, defendant’s competitor, except where the defendant’s relationship with the person he has induced is privileged..

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19
Q

INJUNCTIVE RELIEF FOR UNFAIR COMPETITION - USE OF COMPETITOR’S TRADE SECRETS

A

A trade secret will be protected by the courts. 4 part analysis

(a) Is the Property a Trade Secret?
(b) How was the Trade Secret Taken?
(c) What Is the Relationship of Taker to Owner?
(d) Who May Be Enjoined?

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20
Q

(a) IS THE PROPERTY A TRADE SECRET?

A

A trade secret is information not readily available that gives its possessor a competitive advantage.

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21
Q

(b) HOW WAS THE TRADE SECRET TAKEN?

A
  • Courts are more likely to issue an injunction if the information was obtained by improper conduct (e.g., theft, bribery, misrepresentation, breach of a confidential relationship or other duty to retain secrecy, or espionage through electronic or other means).
  • Only tangible expressions of trade secrets are protected; there is no violation of a trade secret when information is memorized.
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22
Q

(c) WHAT IS THE RELATIONSHIP OF TAKER TO OWNER?

A
  • Was there either a fiduciary relationship or a contract relationship?
  • If so, an injunction is more likely.
  • Express covenants not to disclose trade secrets are always specifically enforceable.
  • However, an express contractual covenant is not required in seeking an injunction against disclosure of trade secrets.
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23
Q

(d) WHO MAY BE ENJOINED

A
  • Both the wrongful taker and/or the person who intends to use the trade secret may be enjoined.
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24
Q

INJUNCTIVE RELIEF FOR INFLICTION OF PHYSICAL HARM

A
  • Traditionally, equity courts refused to enjoin certain threatened acts of physical violence, but today, a plaintiff may receive injunctive relief against torts involving injury to his person (a “protectable right”), especially those involving stalking and family violence.
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25
Q

IS THE LEGAL REMEDY INADEQUATE

A

A legal remedy could be money damages, replevin or ejectment.

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26
Q

WHEN WILL MONEY DAMAGES BE INADEQUATE?

A
  • If money damages will make the plaintiff whole, equity will not act. Money damages might be inadequate if
    (1) D is insolvent
    (2) The injury is irreparable
    (3) A multiplicity of actions might be necessary; or
    (4) P has no right to damages (e.g., the tort is only prospective).
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27
Q

IS THE LEGAL REMEDY INADEQUATE? REPLEVIN & EJECTMENT

A
  • Replevin may be inadequate if D could put up a replevin bond for a unique chattel or if there has been a change in the chattel (so that the sheriff would not be able to identify it).
  • The legal remedy may be inadequate b/c the sheriff refuses to act.
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28
Q

IS THERE A PROPERTY RIGHT OR PROTECTABLE INTEREST INVOLVED?

A
  • Courts go out of their way to find the exercise of a property right by liberally construing the facts
  • A right to protection exists when there is a tort (i) injuring tangible property right, (ii) injuring business, or (iii) involving personal rights.
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29
Q

TIP On the exam, the torts involving personal rights are usually….

A

defamation and right to privacy. In analyzing these questions, first try to construe the facts so as to find the existence of a property right; then refer to the liberal trend eliminating the property right requirement.

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30
Q

IS ENFORCEMENT FEASIBLE? (2 PART ANALYSIS)

A
  1. Is the Injunction Sought “Negative” or “Mandatory”?

2. Does Injunction Require an Out-of-State Act?

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31
Q

FEASIBILITY: (1) IS THE INJUNCTION SOUGHT “NEGATIVE” OR “MANDATORY”?

A
  • A negative injunction is easier to get since no supervision is required.
  • The recent trend is to be more liberal in giving “mandatory” injunctions.
  • In these cases, look to the complexity of the act to be performed and whether continuous acts are required
  • Remember, a court may avoid the problem by couching the decree’s terms negatively.
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32
Q

FEASIBILITY: (2) DOES INJUNCTION REQUIRE AN OUT-OF-STATE ACT?

A
  • GA follows the recent trend to grant such injunctions, but only in cases involving frauds, trusts, and contracts where teh court has Jx over the defendant and so can ensure that he will carry out the court order.
  • The courts are more hesitant to grant a mandatory injunction in these cases, but will still do so under proper circumstances.
  • Note that GA courts will not enjoin out-of-state trespasses by one subject to their Jx.
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33
Q

ARE THE HARDSHIPS BALANCED?

A
  • Weigh the benefit to the plaintiff if the injunction is granted against the hardship to defendant (or to the public) that would result from the injunction.
  • If the benefit to the P is outweighed by the burden on the D, the court generally will not issue an injunction and will compensate the P with money damages instead.
  • Also, consider the defendant’s behavior: A wilful defendant or one who has proceeded in the fact of the plaintiff’s assertion of his claim generally will not profit from this rule.
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34
Q

DEFENSES THAT MIGHT BE AVAILABLE TO A DEFENDANT

A
  1. Unclean Hands
  2. Laches
  3. Impossibility, Hardship, and Freedom of Speech
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35
Q

UNCLEAN HANDS DEFENSE

A

It is a defense that the party seeking the injunction has acted improperly in the transaction in question.

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36
Q

TIP Be careful using the unclean hands defense. Why?

A

It is available only if the unclean hands conduct is related to the case at hand. Unrelated unfair conduct is irrelevant. Thus, for ex., the fact that P has committed fraud in the sale of other parcels of land in a subdivision will not help defendant if there was no fraud in the sale to D.

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37
Q

LACHES DEFENSE

A
  • Laches may be available if plaintiff has unreasonably delayed in bringing an action and the delay is prejudicial to D.
  • Laches commences to run when the P has knowledge that a right has been infringed.
  • Laches may serve as an earlier time bar than the statute of limitations;
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38
Q

EXAM TIP DIFFERENCE BTWN LACHES & SOL

A
  • SOL is concerned w/ the mere passage of time
  • Whereas laches is concerned w/ the effect of the passage of time – the prejudicial effect of sitting on one’s equitable rights may cut off an action sooner than the analogous SOL.
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39
Q

DEFENSE OF IMPOSSIBILITY, HARDSHIP & FREEDOM OF SPEECH

A

In appropriate circumstances, impossibility, hardship or free speech rights may be used as a defense to an action for injunctive relief.

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40
Q

INTERLOCUTORY INJUNCTIONS

A
  • An interlocutory injunction is used to preserve the status quo between the parties until a full trial on the merit’s can be held.
  • Notice of the hearing for an interlocutory injunction is generally required to be given to a D, and a bond is required to secure a D’s losses in case the injunction should not have been issued.
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41
Q

WHAT MUST P SHOW TO OBTAIN AN INTERLOCUTORY INJUNCTION?

A
  • P must show that she is likely to prevail on the merits but will suffer irreparable injury before the trial can be held unless the interlocutory injunction is granted.
  • Interlocutory injunctions are available in any type of case (e.g. tort or contract) in which a change in the status quo before the end of the trial may result in irreparable injury.
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42
Q

PRELIMINARY INJUNCTION

A
  • Granted only after a regular, adversary-type court hearing.
  • Generally remains in effect until the conclusion of a full trial.
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43
Q

TEMPORARY RESTRAINING ORDER

A
  • In drastic circumstances (where irreparable harm will occur before a hearing on preliminary injunction can be held) a TRO may be sought.
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44
Q

TRO NOTICE REQUIREMENTS

A
  • Less form al notice is required than w/ a preliminary injunction
  • A TRO may be granted w/out notice of the moving party can make a strong showing why notice should not be required
  • Under GA law, the duration of a TRO is at the discretion of the court, w/ a maximum of 30 days. Of course, the restrained party cannot be held liable for violating the TRO unless he knew about it when he acted.
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45
Q

EXAM TIP If an exam question does not tell you what type of injunction is sought…

A

assume you’re dealing w/ a permanent injunction

46
Q

EXAM TIP If question asks about temporary injunctive relief …

A

be sure to note that the purpose of such relief is to preserve the status quo to prevent irreparable injury before a trial can be held.
- If an immediate action is needed to prevent irreparable harm, think about a TRO, which is intended to maintain the status quo until a more formal hearing can be held regarding issuance of a preliminary injunction.

47
Q

INJUNCTIVE RELIEF AGAINST CRIMINAL CONDUCT

A
  • Injunctive relief generally is not available against criminal conduct on constitutional grounds, as it would deprive the defendant of the right to a trial by jury.
  • But consider whether the crime is also a tort, which may be enjoined.
48
Q

INJUNCTIVE RELIEF INVOLVING POLITICAL RIGHTS

A
  • Injunctive relief involving political rights generally is not available bc of the availability of legal remedies; e.g., mandamus usually is sufficient.
  • But consider whether the conduct endangering the political right is also tortious and thus subject to relief.
49
Q

WHAT MUST A PLAINTIFF SHOW TO OBTAIN SPECIFIC PERFORMANCE?

A
  1. A contract exists;
  2. The P has performed or is ready, willing, and able to perform;
  3. The legal remedy is inadequate;
  4. Enforcement is feasible;
  5. Mutuality of remedy exists;
  6. There are no defenses available to the D.
50
Q

SPECIFIC PERFORMANCE: DOES A CONTRACT EXIST?

A
  • Remember that equity requires the contract terms to be somewhat more certain than would a court in an action at law, although parol evidence may be used to make the contract more certain.
  • The contract must be supported by consideration
  • Generally, equity courts will not examine the sufficiency of consideration
  • However, inadequacy of consideration, or any other fact showing a contract to be unfair, unjust, or against good conscience, may justify a court’s refusal to decree specific performance.
51
Q

SPECIFIC PERFORMANCE: CAN PLAINTIFF’S PERFORMANCE BE ASSURED?

A

The P must have performed or prove he is ready, willing, and able to reform. There are 2 issues likely to appear on the bar exam:

(1) Time of the essence clause
(2) Deficiencies in Land Contracts

52
Q

SPECIFIC PERFORMANCE: TIME OF THE ESSENCE CLAUSE

A
  • A clause requiring performance within a stipulated period of time must be expressly included in the contract; in its absence, a reasonable time to perform will be implied.
53
Q

SPECIFIC PERFORMANCE: IF THE CONTRACT IS WHOLLY EXECUTORY …..

A

The time of the essence clause will be strictly enforced.

54
Q

SPECIFIC PERFORMANCE: IF THE CONTRACT IS PARTIALLY EXECUTED…

A

The court will seek to avoid the effect of the clause so as to avoid forfeiture.

The court will be likely to avoid the effect of the clause if (i) loss to the other party is small, (ii) the forfeiting party would suffer undue hardship, (iii) the seller has performed acts giving rise to a waiver situation, (iv) the tardiness is “de minimis.”

  • Also look to see if judicial sale might be appropriate
55
Q

SPECIFIC PERFORMANCE: DEFICIENCIES IN LAND CONTRACTS

A
  • The main concern here is whether the vendor can deliver the quantity or quality of land promised.
  • If there is a deficiency, the vendor may get specific performance only if the deficiency is minor.
  • A vendee, on the other hand, can generally get specific performance if the deficiency is very large.
  • In any case, if specific performance is granted, there must be an abatement in price for the deficiency.
56
Q

EXAM TIP ON MS, the examiners will often try to trick you with a marketable title question suggesting that specific performance should not be granted regarding land sale because, before closing, the buyer discovers that the land is subject to a lien (i.e, a defect in quality). REMEMBER…

A

Remember that the duty to provide marketable title does not arise until closing. Thus, if the closing will result in marketable title (e.g., because closing funds will be used to pay off the lien), there is no marketable title problem.

57
Q

IS THE LEGAL REMEDY INADEQUATE?

A
  1. The thing Bargained for is Rare or Unique

2. Inadequacy of Money Damages

58
Q

IS THE LEGAL REMEDY INADEQUATE: (1) THE THING BARGAINED FOR IS RARE OR UNIQUE? (3 types of property that qualify)

A
  1. Real Property.
  2. Personal Property
  3. Personal Services Contract
59
Q

IS THE LEGAL REMEDY INADEQUATE? (1) THE THING BARGAINED FOR IS RARE OR UNIQUE – REAL PROPERTY

A
  • Land is always unique.

- Thus, both the buyer and seller of land can get specific performance

60
Q

IS THE LEGAL REMEDY INADEQUATE? REAL PROPERTY EXAM TIP

A

Be wary of questions describing a “generic” parcel of land and telling you that the seller is willing to give the buyer similar or even better land right next door to the parcel.

  • Dont be fooled.
  • All land is considered unique.
  • Therefore, similar or better land is not a sufficient remedy
  • Grant specific performance to the buyer.
61
Q

IS THE LEGAL REMEDY INADEQUATE? (1) THE THING BARGAINED FOR IS RARE OR UNIQUE – PERSONAL PROPERTY

A
  • If personal property is involved, see whether it is
    (i) unique in kind
    (ii) of personal significance to the buyer (using a reasonable person test)
    (iii) or in short supply.
  • If not money damages are adequate.
62
Q

IS THE LEGAL REMEDY INADEQUATE? (1) THE THING BARGAINED FOR IS RARE OR UNIQUE – PERSONAL SERVICES CONTRACT

A
  • If personal services are involved, check to see if they are unique.
  • If not, money damages are adequate.
  • Even if the services are unique, equity will not force a person to perform services because of “involuntary servitude” problems and the difficulty of enforcement.
  • However, the defendant can be prevented from working for someone else.
63
Q

IS THE LEGAL REMEDY INADEQUATE?

(2) INADEQUACY OF MONEY DAMAGES

A
  • Money damages may be inadequate when the D is insolvent, damages are speculative, or multiple suits would be necessary
  • Remember- a liquidated damages clause can make the legal remedy adequate if it provides that it is the exclusive remedy of the parties.
64
Q

DOES MUTUALITY OF REMEDY EXIST?

A
  • To be awarded specific performance, mutuality of remedy must exist.
  • Negative mutuality
65
Q

NEGATIVE MUTUALITY

A

(i.e., the concept that the P should not be allowed to enforce a contract b/c the D would not be able to) is not a defense to enforcement because courts will grant specific performance if both parties are capable of performing and the court can sufficiently secure the P’s counterperformance.

66
Q

AFFIRMATIVE MUTUALITY

A

(i.e., the concept that the P should be allowed to enforce the contract b/c the D would have been allowed to) is relevant only to land sale contracts; since the buyer can get specific performance of a land sale contract, the seller can too, even though all he will get is money.

67
Q

IS ENFORCEMENT FEASIBLE?

CONTRACTS FOR PERSONAL SERVICES

A
  • A personal services contract will not be enforced, both because it would be tantamount to involuntary servitude and because it would be difficult to supervise performance.
  • However, a noncompetition covenant may result in the granting of relief
68
Q

IS ENFORCEMENT FEASIBLE? LAND SALE CONTRACTS

A

A. If both the parties and the res are before the court, enforcement is feasible.
B. If the seller and the res are before the court, enforcement is feasible if the purchaser is bringing the action.
- If the seller brings the action, it is difficult to grant specific performance bc it requires the buyer to make a payment of money, which is an in personam order.
C. If the buyer and the res are before the court, enforcement is feasible since the court will simply act in rem and transfer the property by court order if the seller does not comply.
D. If both parties are before the court, both the res is outside of the Jx, the recent trend has been equity courts to decree that the property be conveyed, and the court may hold the seller in contempt if he does not make the required conveyance.
- In GA, equity may enter a decree in cases of fraud, trust, or contract, even though property not w/in GA may be affected.

69
Q

ARE THERE ANY DEFENSES AVAILABLE TO THE DEFENDANT?

A
  1. Standard contract defenses
  2. Misrepresentation
  3. Mistake
  4. Equitable defenses
70
Q

STANDARD CONTRACT DEFENSES

A
  • Standard contract defenses, including the Statute of Frauds, inadequate consideration, misrepresentation, impossibility, and mistake, may be raised.
  • The most impt here is the statute of frauds and the exception to its application, the part performance doctrine.
71
Q

PART PERFORMANCE DOCTRINE

A
  • The part performance doctrine may operate to take a contract out of the Statute of Frauds (i.e., allow it to be specially enforced).
  • An oral contract for the sale of land may be enforced if:
    (i) The D admits the contract;
    (ii) The contract has been so far executed by the party seeking relief that if the contract were abandoned, he could not be restored to his former position;
    (iii) Full payment was accepted by the vendor;
    (iv) There is partial payment coupled w/ possession; or
    (v) There is possession coupled w/ valuable improvements.
72
Q

MISREPRESENTATION

A
  • To be a defense, the misrepresentation must go to a material fact.
  • Concealment of a material fact will prevent specific performance as long as the party concealing this information stands in a confidential relationship to the other contracting party.
  • The level of misrepresentation necessary to qualify as a defense to specific performance is not as high as that necessary to result in a rescission of the contract.
73
Q

MISTAKE

A
  • To be a defense, the mistake must be bilateral, and a mistake of fact.
  • A mistake of law generally is not sufficient but may be if the terms of the contract are unfair.
  • Unilateral mistake is a defense to specific performance only if the nonmistaken party either knew or reasonably should have known of the mistake.
74
Q

EQUITABLE DEFENSES

A
  • Equitable defenses include e.g., laches, unclean hands, unconscionability (tested at the time of contract formation).
75
Q

EXAM TIP: THE TEST FOR UNCONSCIONABILITY IS VERY STRICT …

A

There must be some gross unfairness at the time the contract was made. The fact that a party merely made a bad deal is not enough.

76
Q

SPECIFIC PERFORMANCE:

PARTICULAR PROBLEMS

A
  1. Covenants Not to Compete
  2. Specific Enforcement of Contracts to Make Particular Testamentary Dispositions or Execute Mutual Wills
  3. Equitable Conversion
77
Q

SPECIFIC PERFORMANCE: PARTICULAR PROBLEMS:

NON-COMPETES IN EMPLOYMENT CONTRACT

A
  • Although an employment contract will not be specifially enforced, a covenant not to compete will be if:
    (i) The covenant is expressly contained in the contract,
    (ii) The services are unique
    (iii) The covenant is reasonably necessary to protect the ER’s interests, and
    (iv) The covenant is reasonable as to both geographical scope & duration.
78
Q

SPECIFIC PERFORMANCE: PARTICULAR PROBLEMS

COVENANTS NOT TO COMPETE

COVENANT IN SALE OF BUSINESS

A
  • Noncompetition covenants expressly included in contracts for the sale of business will be enforceable if the covenant is reasonably necessary to protect the buyer and reasonable in geographical scope and duration.
  • Remember, some courts will “blue pencil” down a covenant not to compete in a personal services or sale of business contract to reasonable scope as long as the contract is not patently unreasonable.
79
Q

SPECIFIC PERFORMANCE: PARTICULAR PROBLEMS

COVENANTS NOT TO COMPETE

COVENANTS NOT TO DISCLOSE TRADE SECRETS

A

Covenants not to disclose trade secrets are specifically enforceable.

80
Q

SPECIFIC ENFORCEMENT OF CONTRACTS TO MAKE PARTICULAR TESTAMENTARY DISPOSITIONS OR EXECUTE MUTUAL WILLS

A
  • As long as the property involved is unique, equity will specifically enforce a contract to make a particular disposition by imposing a constructive trust on the property in the hands of the personal representative.
  • Equity will also enforce a contract to execute mutual wills by imposing a constructive trust on the personal representative of the party who failed to execute a will in accordance with the contractual terms.
  • Where such contracts relate to real property, they must be in writing to be enforceable.
  • Nonetheless, under proper circumstances (e.g., part performance doctrine), specific performance will be granted.
81
Q

EQUITABLE CONVERSION

A

Under the doctrine of equitable conversion, after a contract for the sale of land has been entered into, the vendor has a personalty interest and the vendee has a realty interest.
- For equitable conversion to come into effect, the land sale contract between the parties must be specifically enforceable.

82
Q

RESCISSION

A

Rescission voids the contract and leaves the parties as though the contract had never been made.

83
Q

GROUNDS FOR RECISSION

A
  1. Mistake
  2. Misrepresentation
  3. Other grounds
84
Q

MUTUAL MISTAKE

A
  • Remember the geenreal rule is that only a mutual mistake will suffice for rescission.
    The mistake must go to a material fact
  • Mutual mistakes as to collateral facts (e.g., quality, desirability, or fitness of the property involved) are not grounds for rescission where there have been no express or implied representations.
85
Q

MISTAKE: MUTUAL MISTAKE:

COMPROMISE OF FACTS

A
  • Mutual mistake of fact involving compromise of a disputed fact or a doubtful claim are not grounds for rescission when the fact about which the parties comprised is also the one upon which they were mutually mistaken
  • However, if, as a basis for compromise, both parties assume a fact to be true and on that basis compromise something else, rescission wil lbe allowed.
86
Q

MISTAKE: UNILATERAL MISTAKE

A

In Georgia, unilateral mistake generally will suffice for rescission when

(i) The other party knew or should reasonably have known the mistake;
(ii) The non-mistaken party has not yet taken steps in reliance on the contract, or
(iii) The mistaken party would suffer extreme hardship.

87
Q

EXAM TIP Unilateral mistake is often tested on both the state portion of the bar exam and on the Contracts section of the MBE. The favorite fact pattern…

A

contains a contractor’s bid that is substantially lower than the other bids; the bid is so low that the other party should know it is a mistake.

88
Q

MISTAKE OF LAW

A
  • In GA, mistake of law is a sufficient basis for rescission
89
Q

MISREPRESENTATION

A
  • For the court to rescind a contract, there must be a material misrepresentation of fact.
  • Rescission will be granted regardless of whether the misrepresentation is innocent or fraudulent, but not if the duped party could have discovered the truth through reasonable diligence.
90
Q

OTHER GROUNDS FOR RESCISSION

A

Rescission may also be granted for duress, undue influence, illegality, lack of capacity, or failure of consideration.

91
Q

RESCISSION:

OFFER TO RESTORE OTHER PARTY TO STATUS QUO NECESSARY

A

One rescinding a contract must return or offer to return consideration unless to do so would be unreasonable or impossible.

92
Q

DEFENSES TO ACTION FOR RESCISSION

A
  • The usual equitable defenses (e.g., laches or unclean hands) are available.
  • In GA, a plaintiff’s negligence can be a defense, but only if the other party has been prejudiced thereby.
  • Bc GA permits pleading in the alternative, a plaintiff may claim in a single action both that a contract should be rescinded and, alternatively, that damages should be awarded for fraud.
93
Q

RELIEF IN ADDITION TO RESCISSION

A

If the plaintiff is entitled to rescission and has paid money to the defendant, the plaintiff is also entitled to restitution.

94
Q

REFORMATION

A

Reformation changes the written agreement to make it conform to the original intent of the parties.

95
Q

EXAM TIP Be careful not to confuse rescission w/ reformation

A
  • With rescission, you are arguing that there is no contract because there was no true “meeting of the minds.”
  • With reformation, you are arguing that there was a “meeting of the minds” but that the agreement is not accurately reflected in the written contract.
96
Q

REFORMATION:

IS THERE A VALID CONTRACT

A

Remember that to be reformed, a valid contract must exist in the first instance.

97
Q

GROUNDS FOR REFORMATION:

MISTAKE

A
  • Mutual mistake will ALWAYS suffice
  • The recent trend is to allow reformation for unilateral mistake where the writing does not conform to the original agreement and one of the parties is aware of this (unilateral mistake coupled w/ fraud or inequitable conduct).
  • Generally, reformation is available for mistakes of fact and of law.
98
Q

GROUNDS FOR REFORMATION:

MISREPRESENTATION

A
  • Misrepresentation is sufficient grounds for reformation.
  • It may be innocent or fraudulent
  • An instrument will be reformed to reflect the expressed intent of the parties.
99
Q

DEFENSES TO REFORMATION

A

Look for the usual equitable defenses such as laches, unclean hands, etc. Note the following special cases:
A. Bona Fide Purchaser
B. Special “Nondefenses”

100
Q

DEFENSES TO REFORMATION:

BONA RIDE PURCHASER

A

Equity courts will not allow reformation where the subject matter of the contract sought to be reformed has been sold to a bona fide purchaser for value and w/out notice.

101
Q

DEFENSES TO REFORMATION:

SPECIAL “NONDEFENSES”

A

Generally, a plaintiff’s negligence (e.g., failure to read the contract) is not a bar to reformation, but it can be if the other party was prejudiced thereby.
- And, as a general rule, the Statute of Frauds and parol evidence rule to not apply in reformation cases.

102
Q

REFORMATION OF GIFTS:

REFORMATION BY DONOR

A

A donor may have a gift instrument reformed if it does not express his true intention except where the donee has substantially relied on the gift as conveyed.

103
Q

REFORMATION OF GIFTS:

REFORMATION BY DONEE

A
  • A donee may NOT have a gift instrument reformed, even if the gift instrument does not conform to the original intent of the donor.
  • Some courts, however, allow reformation where the donee has detrimentally relied on the donor’s original intent, which was not expressed in the instrument.
  • The majority would allow the donee to have the gift reformed against the donor’s heirs.
104
Q

MISC. EQUITABLE REMEDIES:

CONSTRUCTIVE TRUST

A
  • A constructive trust is a restitutionary remedy imposed by courts to prevent unjust enrichment when a wrongdoer has gained title to property through misappropriation of another’s money or property.
  • D’s title msut be traceable solely to the misappropriated property (most courts also require a showing that the legal remedy is inadequate).
  • If est., the court will force the trustee to convey to the plaintiff title to the misappropriated property or its product
  • That gives the P priority over unsecured creditors
  • The usual equitable defenses are applicable, and transfer to a bona fide purchaser terminates a plaintiff’s equitable right to the property.
105
Q

EQUITABLE LEIN

A
  • Similar to a constructive trust
  • An equitable lien can be imposed on property to which the D holds title and to which the wrongfully obtained property can be traced.
  • Like a constructive trust, an equitable lien gives the P priority over other creditors w/ interests in the property subject to the lien.
  • Unlike a constructive trust, however, an equitable lien can be imposed on property that was merely improved w/ the Plaintiff’s property or the proceeds thereof.
  • Most courts require a showing that the legal remedy is inadequate but the D’s insolvency usually suffices.
  • In GA, if a statutory method exists for asserting a lien, the creditor must follow the statute rather than rely on an equitable lien.
106
Q

COMPARED W/ CONSTRUCTIVE TRUST

A
  • An equitable lien is appropriate when the property is in the defendant’s hands is worth less than P’s claim, or where misappropriated money is used to improve, not acquire title to, property.
  • A constructive trust should be used when D holds property worth more than P’s claim, because the P will receive the more valuable property.
  • The usual equitable defenses apply and transfer to a BFP prevents imposition of an equitable lien.
107
Q

EQUITABLE MORTGAGE

A
  • An equitable mortgage is imposed by a court against a deed absolute whe na creditor has received the deed from a debtor solely to secure an obligation and later refuses to reconvey the property on satisfaction of the debt.
  • Under these circumstances, the courts will treat the deed as a mortgage and force the creditor to foreclose if the mortgage is unpaid or recovery if the mortgage is paid.
108
Q

EXTRAORDINARY WRITS

A
  • A writ of mandamus compels a public official to perform some ministerial (not judicial) act.
  • A writ prohibition restrains subordinate courts and inferior judicial tribunals from exceeding their Jx when no other legal remedy or relief is available.
  • A writ quo warranto is used to inquire into the right of any person to hold public office, other than the govenor.
109
Q

DECLARATORY JUDGMENTS

A
  • Superior courts may issue declaratory judgments when there is an actual controversy between the parties as to some right, status, or legal relation, and the dispute is of such a nature that it can be terminated by entry of a declaratory judgment.
110
Q

CONTEMPT

A
  • A court has the power to hold a person in contempt when his conduct brings disrespect to the authority and administration of the law.
  • GA courts may sanction for contempt in five cases, the most relevant to the bar exam being:
    (i) misbehavior of any person in the presence of the courts or so near thereto as to obstruct the administration of justice;
    (ii) misbehavior of any of the officers of the court in their official transactions; and
    (iii) disobedience or resistance by any officer of the courts, juror, witness, or other person to any lawful order, rule, etc., of the courts.
111
Q

TYPES OF CONTEMPT & THEIR SANCTIONS

A
  • Contempt can be indirect (i.e., arises from acts committed outside the judge’s sensory perception);
  • or Direct (i.e., arises from acts committed w/in the judge’s sensory perception.
  • It also can be civili (i.e., seeks to coerce future compliance with a court order to compensate a complainant for losses)
  • or Criminal (i.e., seeks to punish prior contumacious conduct and preserve the court’s authority).
  • If contempt proceedings are criminal, criminal proceedings apply.

BAR PREP (13 decks)

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