contracts: feb 4 class notes

recap.
parole evidence rule:
ambiguity in the agreement: see pacific gas, see katrina, see pierless

good faith. 

sju law review article on good faith 


centronics v. genicom
buyer has put a generous amount into escrow to cover the fair value of the property

patterson v. meyerhofer
is it bad faith that meyerhofer is participating in the auction?
the court says meyerhofer impeded on the other party's ability to perform on the contract and so that was not good faith
making bad faith because you are then competing with your should have been business partner at the auction
patterson was reward what he would have made in profit had the contract been performed.
meyerhofer is clearly engaged in bad faith

market street assoc. v. frey
court's position here is a subjective position on bad faith, that the defendant exercised bad faith in not disclosing the computational error and oversight to a provisional clause in the contract.
when a contract is silent on a certain issue, the court assumes hypotheticals about what the parties knew and agreed on to fill the gaps
in market street, the defendants are taking unfair advantage but it's not as clearly and formulaically bad faith

suppose ge had lost its copy of the lease? did market street assoc. have the responsibility to furnish them with a new copy? yes, so that both sides can ensure assent and no ambiguity during the agreement. it's sort of an implicit agreement through the course of a relationship. however, it's guaranteed that you will get a copy of the contract in discovery!

interesting side note at contractsprof's blog on market street assoc.
good faith in contract performance

neumiller farms v. cornett
refusing delivery of chips on the grounds that they were dissatisfactory. but actually, it seems it was a way for avoiding the rising price of potatoes...
can you do that? why did the court determine bad faith?
it's clear that these goods were conforming, and to say that they weren't conforming was bad faith
satisfaction clause in the contract, and that may have inspired comments that
bad faith may up the remedy and satisfy punitive damages

billman v. hensel
the billmans had an agreement contingent on getting financing. the billmans didn't put enough good faith effort into getting financing. stopped payment on a $1k check. but this isn't a typical case; here there's a lack of "honesty in fact" when the billmans say they can't get the money, and in determining the price

feld v. levy
bread crumbs requirements agreement, and the levys are losing money.
stopped making the crumbs without giving notice, but are happy to turn the machines back on for a penny more a crumb.
can they do that? no. if it's going to put the business as a whole in danger, that's not trivial but the agreement does have a six-month clause and it's built in for the protection of the parties.

roth steel v. sharon steel: inflation environment so price of steel is going up and then there's a shortage. sharon sells steel to roth, and asks for a contract modification on the grounds that there's no raw steel available. under duress/coersion, roth agrees to take a lower price. but subsequently, roth learns that sharon has been selling the steel at a higher premium to other customers. therefore, it wants to enforce the original contract because they only renegotiated because sharon misrepresented the facts. the court determines that there was lack of good faith.

nb - you don't need new consideration under the UCC

zapatha v. dairy mart, inc.

hillesland

property: feb 4 2010 class notes

recap.

establishing continuity: acting in purpose of the land is sufficient to establish continuous possession for the statutory period.

tacking for continuity: good faith ownership of the land can be tacked to meet the statutory requirements for adverse possession, if the ownership is privity (voluntary, legal right)

what satisfies SOL for ejectment? must be in privity (see problems from feb 2 class)

adverse possession of chattels: open&notorious element is more difficult to determine.

tolling is suspended if it is reasonable that you could not identify where your chattel was or who had it.

what is reasonable? flexible definition (o'keefe was remanded)

what is diligence? again, no set definition

stolen/lost chattel: might have been stolen, or could have been given away and therefore, the means by which the 3d party got the chattel will influence the ultimate decision in replevin (because the relationships between the parties will go from "owner/other/thief", where thief can't establish title without adverse possession under discovery rule, to "bailor/bailee/buyer" which is valid title under the UCC)

gifts.

elements of a valid gift are:

1. delivery

- actual delivery: actual delivery is evidentiary of plan to actually transfer title

"wrench of delivery" concept that makes sure possessor is aware
     general rule: if something can be handed over for delivery it must, but this rule is eroding
     n.b. - where there is concrete evidence of donative intent, this rule may not apply (if there is a deed
     of gift, there is no need for actual present delivery).

- symbolic delivery (originates from the livery of seisin)

- constructive delivery

2. present donative intent. intent has to be inferred from circumstantial evidence. we look to facts of the delivery to determine the intent. can't be be testimentary (which requires a will instead)

3. acceptance

problem

O owns a ring. O visits A and leaves ring. A discovers and O tells A to keep the ring as a gift. is this a valid gift? depends on what "delivery" and "intent" mean. but this is probably a valid gift: leaving something behind and allowing the person to keep it will largely establish gift, in part because we can't think of a valid reason why it's not a gift. policy judgements.

problem

O owns a ring. A doesn't tell O the ring is missing and gives it back. O tells A she wants her to have the ring. the ring doesn't fit A and so O holds onto it until she can resize. O walks out of the restaurant and is hit by a bus. who owns the ring? A owns the ring through voluntary bailment.

problem.

at the dinner above, O says, "i promise to leave you this ring when i die." O leaves the restaurant and is hit by a bus. what result? no gift, because the statute of wills protects parties from fraud

problem.

woman is given an engagement ring. the engagement breaks off. does she get to keep it? it depends on many issues...

problem.
i promise to give you this when you finish law school. would have to be created intentionally in a way that satisfies the requirements of the future interest. the present donative intent would have to be shown not only symbolically through writing, and because (potentially) there may be contractual issues.

n.b. - 'gifts' are chattel, because land will fall within the statute of frauds. chattel and land fall under statute of wills (because you can make a testimentary gift). deeds are instruments of conveying the interest in land, but deeds are not required for gifts of chattel. as far as conveying interest in chattel, it can be a writing for gratuitous transfer or deed-like documents for passing title (like for cars). deeds are necessary for statute of frauds, which doesn't apply to chattel.

donatio mortis causa a transfer of property made in anticipation of the property owner's death. it can be a substitute for a will. the modern trend is to support the decedent's intent so long as it is clearly donative. 

newman v. bost

van pelt left items to his maid, and

were the items given to the maid a gift?

1. delivery - exercise of domain over the things already in the maid's space.

2. intent - van pelt decidedly had intent to deliver to miss julia the things that were in her room

3. acceptance - the maid exercised control over the things

constructive delivery: giving control over the thing being delivered (for example, keys to a car). 

why in this case was the maid not given the items discussed, like the life insurance? because nothing had been delivered to miss julia (this is like the first problem above).

why do we require this element of delivery for a gift? 

gifts at the time of death -- if van pelt had wanted julia to have the life insurance policy, he should have made a will. even if van pelt had said that he wanted julia to have the life insurance policy, there is concern that this story could be fraud.
our policies make it very difficult to transfer chattel as gifts.

what about the other furniture not in julia's room?

the court determined van pelt made constructive delivery of all and only the furniture that the keys would open.

how else could van pelt have given all the furniture to julia?

symbolic delivery -- he should have put it into his will!

court's opinion on constructive delivery: "Following this case . . . we feel bound to give effect to constructive delivery, where it plainly appears that it was the intention of the donor to make the gift, and where the things intended to be given are not present, or, where present, are incapable of manual delivery from their size or weight. But where the articles are present and are capable of manual delivery, this must be had. This is as far as we can go. It may be thought by some that this is a hard rule--that a dying man cannot dispose of his own. But we are satisfied that when properly considered, it will be found to be a just rule. But it is not a hard rule."

gruen v. gruen

intervivos gift.

super brief:

letter 1: "the painting is yours but i'm going to keep it as long as i live. so donor is giving it but going to continue to possess."

letter 2: my bad. please send back the letter, and please take this substitute letter stating that the painting is yours. regardless, the donor continues to possess.

dad dies, and now the step-mom-widow holds the painting. son sues.

at trial court, step-mom wins because, according to the elements...

1. there was no actual delivery and the symbolic delivery is weird

2. there's no donative intent if you retain possession

3. you can't accept what hasn't been given

dad was trying to write a will, and letting his son know early that the painting would be his.

the appellate court asks, "can the intent from the first letter be changed by the second letter?"

with the ring problems above, you couldn't have given the ring and then ask for it back -- title would have passed.

whatever the painting is, the father is trying to carve up the rights to the chattel over time.

can that be done? what about present donative intent?

father gruen has present intent to create a future interest for his son. he is transferring a remainder a interest with respect to a thing, which will become possessory at some later (agreed to)gifted time)

life estate! the father has created a life estate of ownership for himself and remainder over time to gift his son (future interest).

you have the right to create today the ownership over something in the future.

father didn't pass to son, but instead carved up title over time: he gave himself a life estate and then gave his son the remainder to take title upon expiration of the life estate, but had the present intent to create a remainder.

what makes this different from a will?

future interest exists today in the remainder.
a remainder is an interest with regard to a thing that will ultimately become possessory in the future. 

but how is that interest delivered?

you can only symbolically convey a right to future interest to become possessory of a chattel. and how else could that right have been conveyed without a writing? *and* a writing is a pretty good piece of evidence!

estates.

history in american jurisprudence - stemming from battle of hastings.... not necessary for class/exam, but very interesting...

fiefdom under king william.

feudalism.

the right to alienate. (ok, we do need to know this)

inheritance.

fee simple.

inter vivos put land into the free market for exchange.

economic pressures - the haves and have nots.