Analysis of Contracts and Strict Products Liability Cases in California Law, Study notes of Contract Law

Download Analysis of Contracts and Strict Products Liability Cases in California Law and more Study notes Contract Law in PDF only on Docsity! California First-Year Law Students' Examination Essay Questions and Selected Answers November 2020 ESSAY QUESTIONS AND SELECTED ANSWERS NOVEMBER 2020 CALIFORNIA FIRST-YEAR LAW STUDENTS’ EXAMINATION This publication contains the four essay questions from the November 2020 California First-Year Law Students’ Examination and two selected answers for each question. The answers were assigned high grades and were written by applicants who passed the examination. The answers were produced as submitted by the applicant, except that minor corrections in spelling and punctuation were made for ease in reading. They are reproduced here with the consent of the authors. Question Number Subject 1. Criminal Law 2. Contracts 3. Torts 4. Contracts COMMITTEE OF BAR EXAMINERS OFFICE OF ADMISSIONS QUESTION 1: SELECTED ANSWER A State v. Dave EMBEZZLEMENT Embezzlement is the unlawful conversion of property of another by one who is in lawful possession. When Dave took money from customers and entered less than the actual amount paid, he took property that belonged to D&E (partnership) and exercised dominion and control over the money, which is unlawful conversion. Because he did so volitionally and without informing his partner, he demonstrated a specific intent to deprive D&E of the funds. Because Dave is partner (high-level employee) he is deemed to have possession of the money rather than custody. Dave is guilty of Embezzlement. SOLICITATION Solicitation is asking someone to commit a crime with the specific intent they commit it. When Dave suggested to Bob that when Jayne came into the store on Friday, he could grab her purse and run away, Dave asked Bob to commit a crime (larceny) with the intent that Bob complete the larceny. Dave has committed solicitation. CONSPIRACY Conspiracy is an agreement between two or more people to specifically engage in crime or to do a legal action in a criminal manner. Under the common law, conspiracy requires only an agreement. Under the modern law, most states require an overt act in furtherance of the conspiracy by one of the co-conspirators. Under the Pinkerton rule, each co-conspirator is chargeable for all crimes committed by the members of the conspiracy that are foreseeable and in furtherance of the conspiracy. When Bob walked past Jayne's table, took Jayne's purse, and ran toward the door, he did perform an overt act in furtherance of the crime (larceny of the purse) in agreement with Dave's request they steal the purse. The act of snatching the purse establishes a specific intent to deprive Jayne of the purse because a reasonable person would not snatch a purse if he did not intend to steal it. Bob's act, while not a verbal agreement, satisfies entering into the agreement because an agreement can be entered into by conduct. Bob's act of stealing the purse, thus, completes a conspiracy between Dave and Bob. Dave will be liable for conspiracy under common law and also under modern law. ACCOMPLICE Assisting, encouraging, or helping the completion of a crime with the specific intent it be completed. Here, when Bob took the purse, he assisted Dave to complete the crime of larceny of the purse. The purse was taken by Bob under the encouragement of Dave. Thus, Dave is an accomplice to Bob on the Larceny. Dave is an accomplice and as a result will be liable for all crimes committed by Bob in connection with the larceny. Bob will be deemed to be an accomplice of Dave, too. MERGER Lesser included crimes will merge into major crimes. Conspiracy will not merge into the completed crime. The solicitation charge will merge into the completed larceny. VICARIOUS LIABILITY Dave will be vicariously liable as an accomplice, and also as a co-conspirator for the crimes of Bob. I. State v. Bob LARCENY Trespassory taking and carrying away of personal property of another with intent to steal. When Bob took Jayne's purse (property of another) and ran toward the door (taking and carrying away) he took the purse without permission and with the intent to permanently deprive Jayne of the purse because a reasonable person would not snatch a purse from a stranger and run away if it was not their intent to permanently deprive them of the purse. Because there was no use of force or threat of force, the crime was not robbery. Thus, Bob is guilty of larceny. BATTERY (Phil) Unlawful application of force resulting in harmful or offensive contact. When Bob knocked down Phil, who saw what was happening and was trying to stop Bob will be guilty of involuntary manslaughter. CONSPIRACY Supra. Accomplice Supra. VICARIOUS LIABILITY Bob will be liable as an accomplice and as a co-conspirator by the crimes of Dave. QUESTION 1: SELECTED ANSWER B With what crimes could Dave be reasonably charged? Discuss. CRIMES OF DAVE LARCENY Larceny is the trespassory taking and carrying away of the property of another with intent to permanently deprive. Dave is noted to routinely enter less than the actual amount paid by customers and pocket the difference. The money is not his, but belongs to the business, though, he will assert that, as a partner, he is entitled to a little off the top and it wouldn’t be noticeable. However, by placing the money in his pocket, he "carries" away from the register and demonstrates that he has the intent to keep the money for himself. Dave can be charged with larceny from the register. EMBEZZLEMENT Embezzlement is the crime of taking that property which has been entrusted to a person lawfully and converting it for own purposes. Here, Dave is a partner in the business who takes care of the register. He is entrusted with the receipts taken in on products sold. He will assert that the money is rightfully his as a partner. The State will show that, while Dave is a high-level employee and is entrusted with the money, he is not within his rights to convert the proceeds to his own use. Therefore, Dave can be charged with embezzlement of the money from the register. He cannot be charged with larceny and embezzlement, however. The court is likely to find that Dave has committed embezzlement as one who was entrusted with the proceeds paid by customers and as a higher level "employee" of the business. SOLICITATION Solicitation is the urging or asking of another to commit an unlawful act. It is a specific intent crime and can be merged with conspiracy or with the completed crime. Dave worked the front of the donut store and notes that Jayne comes in every Friday after withdrawing $250 from the bank across the street. Dave suggests to Bob, a regular customer, that he should grab her purse and run away. Dave can be charged with solicitation of Bob. CONSPIRACY Conspiracy is the agreement between two persons to commit an unlawful act or a lawful act unlawfully. It requires intent to commit the crime and, modernly, an overt act in furtherance is required. Bob has been asked to take Jayne's purse when she comes into the shop on Friday. Dave is aware that she goes to the bank prior to her visit and that she has $250 in her purse from her withdrawal for personal expenses. Dave suggests to Bob that they can later split the money indicating his intent to deprive Jayne of the money by larceny. Bob, however, initially states that he will think about it. Because Bob walks past Jayne's table on the next day with intent to take her purse, he has indicated his agreement with Dave. Conspiracy may be inferred circumstantially--i.e. Bob's act of walking past Jayne's table and taking the purse. Dave can be charged with conspiracy. criminal purpose. He is planning to take the purse, which is larceny, and meets the element of a crime. Therefore, Bob will not meet the elements of common law burglary but will meet the elements of modern burglary and can be charged with that. LARCENY OF THE PURSE See rule, supra. Bob walks by the purse that is lying on the table, takes it and runs. By taking the purse that is Jayne's and running, Bob has satisfied the elements of trespassory taking (Jayne's property), carrying away (running) with the intent to permanently deprive (the agreement to take the purse and split the money with Dave). Therefore, Bob will be charged with larceny of the purse. ASSAULT OF PHIL Assault is the apprehension of a battery or attempted battery. Bob runs out the door with the purse and Phil, who has seen what is happening, stands in his way and blocks the door. It reasonable to expect that Phil said that Bob was running toward him and would have been apprehensive that Bob would, in fact, run into him. Bob will assert that Phil was interfering and that he should have gotten out of the way. However, this will not be a viable excuse. Bob will be charged with assault of Phil. BATTERY OF PHIL Battery is the use of force for harmful or offensive touch that may cause bodily injury. Bob knocked Phil over as he stood in the way of Bob's egress of the store. Knocking someone over would be considered both an offensive touch and likely harmful with the potential for bodily injury. Bob will assert that he merely moved Phil out of the way. However, this will not be a viable excuse. Therefore, Bob will be charged with battery of Phil. ASSAULT OF ARLENE See rule, supra. Bob is not looking and collides with Arlene. If Arlene was looking and saw that Bob was running in her direction and not looking, it is likely that she was aware of the potential for being hit or knocked over. Bob is moving quickly and not looking. Since assault is a specific intent crime and one engages in it with the reasonable expectation that the resulting harm will occur--Bob may have an argument that he did not intend to hit Arlene. However, Bob is running and out in the street where there are likely to be people who are moving along the sidewalks. Bob would be expected to know that he is likely to contact someone. Therefore, Bob can be charged with the assault of Arlene. This is a lesser included crime and will merge with the battery and the homicide. BATTERY OF ARLENE See rule, supra. Bob collides with Arlene and knocks her to ground where she hits her head. This is harmful and causes serious bodily injury. Bob will have no further argument beyond that fact that he did not see her and did not intend to run into her, but would have had to know that the street would be occupied by people that he could contact while running. Bob will be charged with battery of Arlene. HOMICIDE OF ARLENE Homicide is the unlawful killing another. Arlene is a person who is knocked to the ground by Bob, hits her head and dies. Therefore, there is a homicide. CAUSATION ACTUAL CAUSE Actual cause is the "but for" the actions of the D, the harm would not have resulted. Here, Bob has stolen a purse and is running from the store that he has committed the crime in. He collides with Arlene, whom he will argue that he did not see, but who is knocked to the ground and dies. But for the running that Bob is doing to escape the scene of the crime, Arlene would not have been knocked to the ground and died. Therefore, Bob is the actual cause of the death of Arlene. PROXIMATE CAUSE Proximate cause is the natural and foreseeable consequence of the actions of D without intervening acts that would break the causal chain. Here, Bob is running from the store. It is foreseeable that the street would be filled with people and that he would contact one or more of them in the course of running without looking. Bob will argue that he did not see Arlene and could not avoid her. He will attempt to show that she should have moved and did not. However, it is likely that this will not present a viable intervening event. Bob will be the actual and proximate cause of the death. and that this murder will fall under the misdemeanor murder rule. The killing of Arlene was likely unintentional and reckless, and Bob will be charged with involuntary manslaughter for her death. November 2020 ESSAY QUESTION 2 OF 4 Answer All 4 Questions California First-Year Law Students' Examination Your answer should demonstrate your ability to analyze the facts in the question, to tell the difference between material facts and immaterial facts, and to discern the points of law and fact upon which the case turns. Your answer should show that you know and understand the pertinent principles and theories of law, their qualifications and limitations, and their relationships to each other. Your answer should evidence your ability to apply the law to the given facts and to reason in a logical, lawyer-like manner from the premises you adopt to a sound conclusion. Do not merely show that you remember legal principles. Instead, try to demonstrate your proficiency in using and applying them. If your answer contains only a statement of your conclusions, you will receive little or no credit. State fully the reasons that support your conclusions, and discuss all points thoroughly. Your answer should be complete, but you should not volunteer information or discuss legal doctrines that are not pertinent to the solution of the problem. You should answer according to legal theories and principles of general application. QUESTION 2 Martha is a college student living in a condominium (“condo”) owned by her uncle, John. On various occasions, John promised Martha that he would give her the condo when she graduates, which she will do in a few months. Martha had suggested to John that the condo needed repainting. Recently, John saw his friend Karl, a painter, and offered him $3,000 if Karl would “within the next three weeks, repaint the interior walls of my small condo where my niece Martha lives.” John said that he would supply Karl with all the paint. Karl orally agreed to do the painting, thinking that the condo was in the same city where both John and Karl lived. In fact, the condo was 250 miles away. Two weeks later, Karl’s painting truck with all his equipment was destroyed in an accident that was not Karl’s fault. When Karl called John to tell him that he would not be able to paint the condo as scheduled, he learned for the first time that the condo was 250 miles away. Karl told John that he very much doubted that he would be able to replace his truck and equipment quickly. Karl also told John that, even then, he would not be able to paint a condo 250 miles away for $3,000 unless John paid all his travel and lodging expenses. John told Karl, “Let’s forget about the whole thing.” Martha was disappointed to hear that John was not going to have the condo repainted, so she told him that she would pay someone else $3,000 to have it done. At her painting contractor’s suggestion, she paid him an additional $12,000 to install a new kitchen floor, new kitchen appliances, and new bathroom fixtures. After Martha graduated, John told her that he could no longer afford to give her the condo and instead would be selling it. 1. What claim or claims can Martha bring against Karl, if any? Discuss. 2. What defense or defenses can Karl assert against Martha, if any? Discuss. 3. What claim or claims can Martha bring against John, if any? Discuss. 4. What defense or defenses can John assert against Martha, if any? Discuss. Defenses to Formation: Statute of Frauds (SOF): SOF enforces that certain contracts dealing with the subject matter of marriage, cannot be completed within a year, land sale, executorship, sale of goods equal to or greater than $500, and suretyship require sufficient writing in order to be enforceable. Here, the contract does not deal with any of the subject matters to which SOF applies. Therefore, SOF will not bar enforceability of the contract. Terms: Ambiguity: Ambiguity is when there is a term which is not clearly defined, and the parties may not know what the other meant. Here, M will argue that K should have asked for more specific information prior to agreeing to repaint the condo. K will argue that the term "the small condo where my niece lives" was ambiguous. K will argue that it was not clear that the condo was not 250 miles away. K will argue that this ambiguity caused him to agree to a price without all of the information. Therefore, there is ambiguity to the terms. Third Party Beneficiary (TPB): Third Party Beneficiary is when the benefit of the contract is a third party, not party to the contract. Incidental or Intended Beneficiary: Incidental Beneficiary is one who is not named in the contract and is just tangentially benefitting from the agreement between two other parties. An Intended Beneficiary is one who is expressly named in the contract of the other parties and who the contract was intended to benefit. Here, Martha (M) was named in the contract as "my niece" when naming the condo where "my niece" lives. While K may argue that J may have more than one niece, the facts indicate that only M lives at this condo. Therefore, M is an intended beneficiary. Creditor or Donee Beneficiary: A Creditor Beneficiary is one where the duty was owed by one of the parties and the TPB established to extract the duty owed to the TPB. A Donee Beneficiary is one where the purpose is to extract a gift from one of the parties of the contract. Here, K will argue that there is no duty owed to M, as M merely suggested to J that the condo needed repainting. K will argue that J was merely bestowing a gift on M. Therefore, M is a donee TPB. Performance: Discharge by Impossibility: Discharge by impossibility is when the there is an event that was not foreseen which renders the performance of the contract impossible. Here, K will argue that the painting of the truck and equipment destruction in the accident made it impossible for him to complete the contract. M will argue that K could have found a different truck and borrowed equipment in order to complete within the timeframe. Therefore, there is no discharge by impossibility. Discharge by Impracticability: Discharge by impracticability occurs when there is an unforeseen event which renders the performance impracticable without severe burden to the performer. Here, K will argue that the accident will render his performance impracticable, as replacement of his truck and equipment or alternatively rental of, would require significant financial burden to him. Therefore, there may be discharge based on impracticability. Frustration of Purpose: Frustration of purpose occurs when an event occurs that was unforeseen that renders the purpose of the contract non-existent. Here, there is no frustration of purpose because the accident did not render the condo's need for repainting void. Therefore, there is no frustration of purpose. Mistake: Unilateral mistake is when there is a single party that is in mistake that is material to the contract. The contract may be voided if the mistaken party is not the breaching party. Here, K will argue that he was in mistake as to the location of the condo. K will argue that this is material to the contract because it would have impacted the price that he would have charged as it would have required travel and lodging expenses. Therefore, there may be unilateral mistake. Therefore, the governing law is CL. Contracts: Defined supra. Mutual Assent: Defined supra. Offer: Defined supra. Here, M will argue that J offered the condo to her. J will argue that there was no offer, as there was no price associated. Therefore, there was no offer. Acceptance: Defined supra. Here, M will argue that she accepted J's offer by continuing to live there. J will argue that there was no offer so therefore, there could be no mirror image acceptance. Therefore, there is no acceptance. Therefore, there is no mutual assent. Consideration: Defined supra. Here, M will argue that there was consideration of her being a good niece. J will argue that past performance does not satisfy consideration. Therefore, there is no consideration. Therefore, there is no valid contract. Promissory Estoppel: Promissory estoppel is when one party is in reliance of performance of another and acts in reliance of that promise. Here, M will argue that she acted in reliance on J's promise on "multiple occasions" that he would give her the condo when she graduated. J will argue that this was a gratuitous gift and therefore not enforceable. M will argue that she acted in reliance of this promise when she paid for the painting as well as the kitchen floor, kitchen appliances and bathroom fixtures. Therefore, J would be unjustly enriched if not held to the promise and there is promissory estoppel. Defenses to Formation: SOF Defined supra. Here, J will argue that there was no writing, and this dealt with the sale of land. Therefore, J will argue that there was no enforceable contract. Breach: Defined supra. Here J did not give the condo. Therefore, there is breach. Damages/Remedies: Specific Performance: M will argue that J should give her the condo. Compensatory Performance: Reliance Damages - recover payments M may recover $15000 that she spent in reliance of J's promise. 4. What defenses can J assert? Analyzed supra. in question 3. Mutual Assent/Meeting of the minds However, Karl thought the condo was in the same city where he lived. Karl will argue that this means there was no mutual assent, because there was no meeting of the minds as to the subject matter of the contract. Under the objective theory of contracts, generally the parties are judged under a reasonable interpretation of their communications. There was no statement as to where the condo was in the offer or acceptance. Thus, it appears that it was not reasonable to assume its location. However, Karl will argue that a reasonable interpretation of the parties' communications would not indicate a long-distance painting job. Most people hire painters locally. Courts err on the side of finding a contract in cases of doubt. It is likely that a court would find a reasonable interpretation of the parties' communications, would find mutual assent, and that a contract was formed. Consideration A bargained for exchange of legal benefit and legal detriment. Here, John was to pay $3000 and paint and gain a freshly painted condo. Karl was to provide his labor and gain $3000. Thus, there was valid consideration on both sides. II. Third Party Rights A third-party beneficiary is someone who has rights under a contract and whom the contracting parties intended to benefit at the time of formation. Privity Although Martha was not in privity to the painting contract, the third-party beneficiary contract privity requirement has been abolished under Lawrence v. Fox. Intent to Benefit Here, John contracted for painting the "small condo where my niece Martha lives." Martha will argue that she is named in the contract and thus is intended as a beneficiary of the contract. Karl will argue that it was merely an identification of which condo was being discussed, and clearly John was not contracting to benefit Martha as he was planning to sell the condo when she graduated, which was only in a few months. Thus, he will say the benefit to her was incidental and she should be an incidental beneficiary. However, Martha had suggested painting it and would at least benefit for a few months so the court may find an intent to benefit. Classification Here, Martha was not a creditor of either party. A non-creditor beneficiary is a donee beneficiary. Martha is a donee beneficiary if she is not an incidental beneficiary as discussed above. Vesting Vesting occurs when a third-party beneficiary assents to the contract or changes position in reliance on it. The parties are able to remove the third party benefit any time before vesting. Here the parties did remove the benefit and Karl will argue this was before vesting. However, the facts say Martha was "disappointed to hear" John was not going to have the condo repainted, so it appears she was aware and assented to the John/Karl contract. Thus, her rights likely vested. Thus, there is likely a third-party beneficiary contract. Defenses Karl can assert any defenses he had against John. This would include mistake as discussed below. Also, his excuses to performance as discussed below. III. Performance Breach: Anticipatory Repudiation When one party repudiates the contract before the time of performance, the other party has the option to treat it as a present breach and immediately suspend performance and sue for damages. Here, the facts say that Karl's truck was in an accident two weeks after contracting, leaving a week before performance was due. Impracticability When performance becomes so difficult as to become extremely impracticable, through no fault of the defendant, the court may excuse the party’s performance. Here, because Karl's truck and all his equipment was destroyed through no fault of his own, likely he can claim impracticability. Waiver Here, Karl can claim that John waived his duty by saying "let's forget about the whole thing." Thus, he will claim he has no duty Rescission Karl will claim that when John said "let's forget..." there was a recission of the contract. WHAT CLAIM OR CLAIMS CAN MARTHA BRING AGAINST JOHN IF ANY MARTHA V. JOHN Here, there is no clear offer and acceptance (definitions supra). Merely a "promise" by John that he would give Martha the condo when she graduates. Generally, such promises are not enforceable. However, Martha will claim there is a valid unilateral contract, in which John has offered to give her the condo if she graduates from college. Her graduating from college would be her acceptance and also function as consideration (defined supra). There may be a unilateral contract Promissory Estoppel If a promisor makes a promise which they can reasonably foresee will induce reliance on the part of the offeree, the promise may be enforceable to the extent necessary to prevent injustice. Here, John has promised the condo. He could reasonably foresee that she would rely on the promise. In this case a court may grant Martha reliance damages (SEE BELOW). Damages Specific Performance Under a unilateral contract theory, Martha will be seeking a conveyance of the property. Generally, courts do not grant specific performance but because land is unique, they may. Reliance Damages Under promissory estoppel, she may receive reliance damages for $15,000 for painting and improvements. This may include her improvements to the property. John will argue they are not foreseeable. However, likely improving a property you believe you will own is foreseeable. JOHN'S DEFENSES? Impracticability John will claim specific performance is impracticable because he can longer afford it. Statute of Frauds Supra. There appears to be no writing between the parties, so generally a contract for an interest in land is not foreseeable. However, there is an exception where one has moved onto the land and made improvements such as to constitute part performance. She has spent a lot of money improving the property Thus the court may find this has been taken out of the statute and is enforceable. QUESTION 3: SELECTED ANSWER A 1. Alice v. Manufacturer Strict Products Liability In strict products liability, Manufacturer has an absolute duty as a commercial supplier not to put a defective product into the stream of commerce. In the case at hand, Manufacturer produces and sells fully assembled bikes, which makes him the commercial supplier who is the proper person to sue. Liability Is this a defective product? To see if this a defective product courts use the consumer expectation test - Did the product perform as safely as a reasonable consumer would have expected? Here, the frame of the bike collapsed without warning resulting in her crashing and seriously injuring herself. A reasonable consumer would not expect a bike they just bought to collapse while they were riding it, and the bike clearly did not perform safely as Alice's resulting injury shows. Some states, such as California also require that the existence of a defect be present at the time it left the manufacturer’s hands and that it be the proximate cause of the plaintiff's injury. As Manufacturer makes the bikes and ships them directly to customers themselves, and that the bike mechanic said that the bike collapsed as a result of poor welding, it can be assumed that the existence of a defect was present when it left manufacturer’s possession. Proximate cause will be discussed later. What sort of defect is this? A manufacturing defect is where one product is different from the others. Here, Alice's bike mechanic said that "in all his years, he had never seen such sloppy welding on this or any other brand of aluminum bikes." This statement shows that not only is the mechanic familiar with aluminum bikes, but that he is also familiar with Manufacturer's bikes. If he is saying that this is the sloppiest welding that he has ever seen, it is most likely that this is a manufacturing defect. Causation Actual Cause can be established using the but for test: But for Manufacturer's poor welding, would Alice have crashed and injured herself while riding her new bike? Essentially, was Manufacturer's sloppy welding the sole, exclusive, and direct cause of Alice's injury. The facts do not show that Alice or anything else for that matter was involved in causing her injury, Alice was using her bike in the manner in which it was intended and without warning the bike collapsed. From the facts provided, the defect appears to be the actual cause of Alice's injury. Proximate cause is a way of assessing liability based on the examination of intervening forces and the foreseeability of the plaintiff's injury which may limit the defendant's liability. Simply, are there any outside forces that may break the chain of causation and cut off the defendant's liability. Here, the facts do not show any outside intervening or superseding forces that would limit Manufacturer’s liability, and the injury Alice suffered from falling off her bike is easily foreseeable. It appears that the defect is the proximate cause of Alice's injury. Injury Alice's injury is established in the facts when she fell from the bike collapsing and seriously injuring herself. Manufacturer's Defenses In strict products liability, the only defense available is assumption of the risk. Did Alice know of the risk the defect created and did she voluntarily assume it? Here, the facts give no evidence that there were any risks or defects known about the bike, Manufacturer may argue that the risk of falling off a bike is inherent in the product, but it will not likely stand as Alice fell from her bike as a result of the defect. Conclusion Alice will likely prevail in a strict products liability suit against Manufacturer. Negligent Products Liability Duty What is the applicable standard of care? Here, Manufacturer as a commercial supplier had a duty as a reasonable commercial supplier not to put a defective product into the stream of commerce. To whom is a duty owed? A duty is owed to any foreseeable plaintiff who could have reasonably foreseen the risk and harm under the circumstances. Here, as a supplier of bikes, Manufacturer has a duty to take due precautions to prevent defective products from injuring their customers such as in the case at hand with Alice. Breach In manufacturing defects, the plaintiff may use res ipsa loquitur to establish a breach. Res Ipsa Loquitur "The thing speaks for itself" requires that the plaintiff prove that the thing that caused their injury was in the exclusive control of the defendant, that the only possibility of it happening came from the defendant, that it would not have happened unless someone was negligent, and that the plaintiff was not negligent either. Here, there is no evidence of Alice acting negligently, so the burden of proof falls on Manufacturer to prove that they did not breach their duty. From the facts gathered, and Damages Supra. Negligence Products Liability Duty Supra. Breach Supra - Except in Design defects, plaintiff must prove that the designers of the defective product either knew or should have known of the defect. Here, because of all the bad publicity in the racing bike's reviews in bike magazines, Manufacturer knew or should have known about the risk of the bike breaking. Causation Supra. Injury Supra. Defenses Supra. Warranties Implied Warranty of Merchantability (IWM) IWM states that when a seller of a certain kind of goods makes an implied warranty the goods are generally acceptable by those who deal in goods of the kind, and that they are fit for ordinary use. Here, the Bike did not perform as expected when the bike's frame broke without any damage coming from anywhere else. Implied warranty of fitness for a particular purpose (IWF) IWF states that there is an implied warranty when the seller knows or has reason to know that the goods required are for a particular purpose, and that the buyer is relying on the seller's knowledge or skill to furnish or select suitable goods. Here, Bill races bikes, and Manufacturer sold Bill their bike as a bike built for the specific purpose of racing. Because of this Manufacturer appears to have breached their IMF. QUESTION 3: SELECTED ANSWER B Alice vs Manufacturer A manufacturer, distributor, or seller that places a defective product into the stream of commerce can be liable under different theories including strict liability, negligence, warranty, and even intentional tort as describe infra. Strict Liability Identification of parties - Manufacturer is one that devotes to the sale and fully assembles bikes - Alice is a customer that purchased a bike from Manufacturer. In order to assert a claim under strict liability, we need to determine if the product was defective. This could include manufacturing defect, design defect or lack of warning. A manufacturer defect is when the product does not comply to the company’s own standard of the product. Here the facts indicate that when Alice took the bike to the mechanic, she was told that the tubes had not been properly welded together. This means that there was a defect as the tubes were not welded as intending and causing the bike to have a defect. Actual Cause - of cause in fact. This can be determined utilizing BUT FOR TEST. Here, but for M’s failure to inspect the Bike and make it safe, Alice would not have suffered the serious injuries. The fact that the frame collapsed was attributed to M’s failure to properly weld the tubes. Thus, M is the proximate cause of the injures of Alice. Proximate Cause - When there are no intervening causes that breach the chain of causation, D is liable. Here it was foreseeable that if the tubes were not well welded the indication that Alice took the risk, as she was not aware that the bike was defective. Damages - Alice suffered serious injuries. She would be compensated for general and special damages including pain and suffering, medical bills, and loss of work. Intentional Tort - Battery Alice will not be able to bring a suit under intentional tort as there is no indication that M knew that the bike was defective and still sold the bike. Warranty Under the theory of warranty - Alice can also bring a suit. M is expected to produce a product that complies with the intended use and that works properly. Here by M placing a defective product M was breaching the warranty of the product. M has a duty to produce a product intended for the use of riding in a safe manner and by breaching the duty and providing a defective product that did not comply with the basics for the implied warranty of the product, M will be liable as explained supra. Actual Cause - of cause in fact. This can be determined utilizing BUT FOR TEST. Here but for M’s failure to inspect the Bike and make it safe, Alice would not have suffered the serious injuries. The fact that the frame collapsed was attributed to M’s failure to properly weld the tubes. Thus, M is the proximate cause of the injuries of Alice. Proximate Cause – When there are no intervening causes that breach the chain of causation, D is liable. Here it was foreseeable that if the tubes were not well welded the frame could collapse. Defenses - Contributory negligence - When a P is responsible for his contributory negligence for his own injures as he does not take the proper care. The product was defective and under no circumstance Alice contributed to her injury. Comparative negligence - This does NOT apply as explained before, the product was defective and Alice did not contribute to her injury. She did not alter or do anything to modify the bike. Thus, there was no fault of her own. Assumption of the risk - A person can be barred from recovery when the P knows the risk of the activity and knowing the risk undertakes the activity. Here there is no indication that Alice took the risk, as she was not aware that the bike was defective. M will be liable and has to compensate Alice for pain and suffering as well medical bills for the injuries. Bill vs Manufacturer A manufacturer, distributor, or seller that places a defective product into the stream of commerce can be liable under different theories including strict liability, negligence, warranty, and even intentional tort as described infra. Strict Liability Identification of parties - Manufacturer is one that devotes to the sale and fully assembles bikes. Bill is a customer that purchased a bike from Manufacturer. Manufacturer produces racing bikes with carbon frames. Bill intended to use the bike for competition. In order to assert a claim under strict liability, we need to determine if the product was defective. This could include manufacturing defect, design defect, or lack of warning. A DESIGN DEFECT is when the product is not safe due to the design and when there are other designs that make safe the product. Here the facts indicate that M devotes to also producing bikes for racing with carbon frames. He uses the carbon frames to make the bikes lighter than other similar bikes on the market. However, if B can prove that the design was defective as the utility of using the carbon frames affects the safety of the bike, then the court will determine that there is an alternative design. The facts indicate that there are magazines that state that although the using the carbon frames makes the bikes lighter, the bikes are less stable. Thus, there is a defect on the design. Actual Cause - of cause in fact. This can be determined utilizing BUT FOR TEST. Here, but for M using the carbon tubes, the bike was not safe and B would not have suffered the serious injuries. The fact that the frame collapsed was attributed to M failure to properly weld the tubes. Thus, M is the proximate cause of the injuries to Bill. Proximate Cause - When there are no intervening causes that breach the chain of causation, D is liable. Here it was foreseeable that by making the tubes 1 mi lighter the bike will fail. Thus, M is liable for the injuries to B. If B can prove based on this evidence, M will be liable under strict liability to compensate B for the serious injuries suffered as a result of a defective product that design placed in the stream of commerce. Defenses - Contributory negligence - When a P is responsible for his contributory negligence for his own injures as he does not take the proper care. Under strict liability - this is never a valid defense. The product was defective and under no circumstance B contributed to her injury. QUESTION 4 Seller is in the business of building and selling musical instruments. Buyer is a recording artist who tours giving concerts for a living. Ten years ago, Seller sold Buyer a banjo for $10,000 pursuant to a written contract. Although that contract did not mention a touring banjo case, Seller gave one to Buyer along with the banjo at no additional cost. Six months ago, Seller and Buyer agreed that for $15,000 Seller would specially manufacture a custom banjo for Buyer with Buyer’s name engraved on the neck of the banjo. Halfway into the project, Seller and Buyer agreed to increase the price of the banjo to $20,000 due to an increase in the cost of materials. When Seller delivered the banjo, Buyer refused to accept it because Seller had not included a touring banjo case. Because Buyer’s name was engraved on the neck of the banjo, Seller could only sell it for $5,000. In addition, Seller had to pay a $1,000 commission to a musical instrument dealer who found the new purchaser. Seller has now sued Buyer for breach of contract. 1. Buyer claims that the agreement to buy the custom banjo is invalid because it was not in writing. Will Buyer prevail on this claim? Discuss. 2. Buyer claims that the agreement to increase the price from $15,000 to $20,000 was invalid due to a lack of consideration. Will Buyer prevail on this claim? Discuss. 3. Buyer claims that Seller breached the contract because no touring banjo case was delivered as had been done before. Will Buyer prevail on this claim? Discuss. 4. If Seller prevails, what damages, if any, should he be awarded? Discuss. QUESTION 4: SELECTED ANSWER A Buyer vs Seller Applicable Governing Law Contracts for the sale of tangible movable goods are governed by Article 2 of the Uniform Commercial Code or UCC. Here, the item in question is a custom banjo which is a tangible and movable good. Therefore, Article 2 of the UCC governs this transaction. Merchants Merchants are those that regularly deal with a particular good or have specialized knowledge or use of the good. Here, Seller is in the business of building and selling musical instruments. Buyer is a recording artist who tours and gives concerts for a living. It is clear that seller is definitely a merchant, but could be argued whether or not buyer is a merchant as it pertains specifically to the purchase of the banjo versus musical instruments in general. It is more likely than not since buyer is an artist and has done previous deals with the seller, buyer will be considered a merchant as well. Both parties as merchants then must follow a higher standard of care when dealing with each other as compared to non-merchant buyers and sellers. 1.) Whether buyer's claim to buy custom banjo is invalid because it was not in writing? Contract formation In order for an agreement to become a legally enforceable one or contract, there must be mutual assent which is an offer and acceptance, consideration and no defenses to formation. An offer consists of a communicated commitment of certain terms by the offeror to be bound to its terms if accepted by the offeree. Consideration is what makes the agreement legally binding and is the bargained for exchange between the two parties. In other words, what is each person willing to give up in order to receive something from the other party to the agreement. Lastly there can be no defenses to formation such as unconscionability, duress, fraud, or misrepresentation. Here, the dispute arises when buyer refused to accept a custom-made banjo from seller because seller did not include a touring banjo case along with it. Six months ago, buyer and seller agreed that in exchange for $15,000 from Buyer that seller would build a custom banjo with the buyer's name engraved on the neck of the instrument. Thus, a legally enforceable agreement has been satisfied, pending Statute of Frauds. Statute of Frauds The Statute of Frauds doctrine states that in order for certain types of agreements to be legally enforceable they must be in writing and signed by the party it is being charged against. One specific type agreement is for the sale of goods with a value over $500. Here, the agreement for the purchase of the banjo was originally for $15,000, well above the $500 limit. When buyer refused to accept the banjo, he was sued by the seller for breach of contract. Although buyer is right in that the contract must be in writing to be enforceable since the value of the goods is over $500, there are certain exceptions to the Statute of Frauds requirement. In the current case, seller was not selling just any old plain banjo, but a custom manufactured one specifically for the buyer. Furthermore, buyer knew seller had already begun performance of his end of the contract or had begun to create the custom banjo as evidenced by a subsequent Therefore, buyer will not prevail on this claim. 4.) If Seller prevails, whether or not Seller should be awarded any damages. Expectation Damages Expectation damages are the typical awards court prefer to award. Contract damages are not designed to be punitive in nature and this type of damage is designed to award the "benefit of the bargain." In other words, this type of damage is designed to put the parties in the position they would have been had the contract been fully performed. Here, since we established that although the contract was not in writing and even though there was no consideration given for the contract modification that due to the custom nature of the banjo and applicable governing laws under the UCC that there was a valid contract. Seller then would seek expectation damages to bring him to a gain of $20,000 or the amount from the contract. However, there is a duty by the seller to mitigate the damages. Seller was able to sell the banjo to another buyer for $5,000 and thus would only be allowed to seek damages here for $15,000. Consequential Damages This type of damage was reasonably foreseeable at the time of contract formation and results from changes in circumstances related to each party’s performance. Here, it is foreseeable that a manufacturer of instruments would then next try and sell his products to other interested parties. In order to sell the banjo, the seller had to employ a musical instrument dealer who found the new purchaser at a cost of $1,000 in commission. Therefore, seller would also seek $1,000 in consequential damages. This way seller's true damages would equal the $20,000 because if only awarded $15,000 in the form of expectation damages, seller would actually retain $19,000 because of the commission cost. Reliance Damages This type of damage is to recoup any costs expended while trying to see the contract to full performance. There is no mention of any additional cost by either party before buyer's breach, therefore no reliance damages would be awarded. Restitution Damages This type of damage is to prevent any unjust enrichment and is given to cover any previous benefits conferred by either party such as a down payment. Again, there is no mention of any payments being made in accordance with the contract and neither buyer or seller had unfairly gained anything. Therefore, no restitution damages. QUESTION 4: SELECTED ANSWER B Buyer claims that the agreement to buy the custom banjo is invalid because it is now in writing. Will Buyer prevail? Applicable governing law The UCC governs contracts for the sale of goods while the common law governs contracts for providing services. Here, this contract was a hybrid between both the sale of a good, a banjo and the manufacture of a banjo. When a contract had differing components, either the Gravamen test which uses components of both the UCC or the predominant purpose test which determines which of the two should be applied is used. Because the cost of the good, a custom-made banjo, is significant, namely $15,000 compared to the work required to produce the good, it is more reasonable to apply the UCC to this contract. Thus, the UCC will govern this contract. Status of Parties In a UCC contract, if the parties are merchants, special rules may apply. A merchant is one who deals in goods of the kind or holds himself out to be an expert in such goods. Here, Seller is in the business of building and selling musical instruments and Buyer is a recording artist who gives concerts for a living. Thus, both parties are merchants. Valid contract: 10 years ago 10 years ago, Seller sold Buyer a banjo for $10,000 pursuant to a written contract. At Here, Seller, in good faith, notified Buyer that the cost of materials had increased and requested that the price be increased to $20,000 to which Buyer agreed. While normally such a modification would fall under the statute of frauds because it is an increase in price over $500, as noted above, this contract does not fall under the statute because it is a specially made good. Thus, for this reason, this was a valid modification of a UCC contract made between 2 merchants and Buyer will not prevail on this claim. Buyer claims that Seller breached the contract because no touring banjo case was delivered as previously done. Will Buyer prevail? As noted above, a course of dealing or course of performance in a UCC contract can only be established by a series of performances or dealing. Because only one other dealing had occurred between the parties, this did not suffice to create any pattern of behavior between the parties and cannot be used to claim that a touring case should be included this time. The time lapse between the two events, even if they may have possibly created some expectations in Buyer, would not be reasonable given the duration. Had he wanted a case, he could have made this a term of the contract. Seller's obligation under the Perfect Tender Rule is to provide the banjo only. Thus, Seller did not breach the contract as this will be viewed as a separate contract not related to the one performed 10 years previously. It is possible that there may have been prior negotiations orally about this issue which might raise a parol evidence rule consideration. However, this only applies to written contracts and here, the contract was oral, so any prior negotiations are not relevant as the contract only contemplated the banjo. If Seller prevails, what damages should he be awarded? Expectation damages require the aggrieved party to receive the benefit of the bargain of the contract which is to recover what they expected to receive had the contract been performed as promised. Here, the modified contract was for the banjo to be completed for $20,000. Seller would expect to recover his lost profit although it is not clear what his expenses, including any incidental damages might be. When a Buyer breaches and does not keep the good, the Seller is entitled to recover the difference in the contract price and the market price which will presumably be less. Given that this is a special good, it likely has no market price that can be determined. Therefore, he can recover the difference in the contract price and the resale price but must make best efforts to resell at the highest price possible. Here, because Buyer's name was etched on the banjo, he could only sell it for $5000.00 which is very likely a reasonable price since most consumers do not want someone else's specially made item. Thus. Seller did his best to mitigate the damage in this regard. Thus, Seller should receive $15,000 which is the difference between the modified contract price and the resale price plus any incidental damages. Should Seller receive damages for the $1000.00 commission to a musical instrument dealer? Because it would be difficult to sell the banjo, Seller will argue that it was reasonable to hire someone to sell the guitar and that these are "incidental" damages he incurred in selling the banjo. However, $1000.00 in this case seems to be high as it represents 20% of the final sale price and the original value was $20,000. Thus, Buyer will argue that this commission price is exorbitant and demonstrates a failure to mitigate appropriately as he should have been able to find a buyer without having to pay a $1000 sales commission. This is a debatable point and it is possible that Seller will not receive full damages for paying the $1000. Could Seller recover under a restitution theory? While this is a UCC contract related to sale of a good, if the contract were viewed as a common law service contract, Seller could attempt to recover under a restitution theory of quantum meruit, the value of the services he provided in making the banjo, along with quantum meruit the value of the monetary investment made in performing the contract. However as noted above, this is more appropriate to be governed by the UCC so that this theory would not be applicable.