Smart Sheets
For the UBE (MBE+MEE)
February 2020 Edition
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DISCLAIMER
The SmartBarPrep Smart Sheets (hereinafter “Study Guide”) are designed to
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(“MBE”), and/or Multistate Essay Exam (“MEE”). It is NOT designed to be a
prediction of what will be asked on the upcoming bar exam or any future
examinations. Although many of the same subjects, topics, and rules have been
repeated on past exams, there is NO GUARANTEE that any future exam will
test the same or similar subjects, rules, and/or topics that have appeared on past
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examiners will test on any future UBE, MBE, MEE, or state’s bar exam.
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UBE Smart Sheets
Priority Ratings
Ratings Guide
A priority rating (H, M, or L) will be listed in the color-coded circle next to each rule.
Priority Circle
Priority Explanation
High Priority – these are the most important and
frequently tested rules.
Medium Priority – these rules are tested slightly less
frequently, but are still important.
Low Priority – these rules have been tested the least.
The priority ratings are based upon two primary factors:
 How often that rule has been tested in the past on the MEE essays for that particular
subject area. This testing frequency data is also useful for prioritizing the MBE rules
because both the MBE and MEE sections are drafted by the same entity (the
National Conference of Bar Examiners).
 The testing frequency for each topic in the official MBE Subject Matter Outline
released by the National Conference of Bar Examiners.
There are no LOW priority ratings for six subjects1 because these subjects have only been
tested on the MEE since July 2007, and the pool of exams to pull data from was more limited.
As such, we felt many important rules would receive an unwarranted LOW designation.
The purpose of providing the HIGH/MEDIUM
HIGH/MEDIUM/LOW
IUM/LOW priority rating is so you can see how
important each rule is compared to the other rules at a glance, and prioritize your studying
1
Constitutional Law, Contracts, Criminal Law & Procedure, Evidence, Real Property, and Torts.
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UBE Smart Sheets
to focus on the most important and frequently tested rules first and foremost before
moving onto the less important ones.
For example, whenever a Civil Procedure question appeared we found that approximately
forty (40%) percent of the time a component of the question dealt with the “Subject Matter
Jurisdiction: Diversity of Citizenship” rule. Since this rule is tested frequently, it makes
sense to spend more time memorizing it than, say, the rule of “Depositions”, which appeared
only once in the last 25 years.
Although a rule with the rating of LOW or MEDIUM
MEDIUM has shown up either zero or only a
few times in the past, that rule may still show up on future bar examinations. Therefore,
such rules should NOT be ignored, and if you have enough time it should be memorized.
The HIGH,
HIGH MEDIUM
MEDIUM,
IUM or LOW designation is not a prediction of what rules will appear on
any given exam.
Instead, it is meant to help you prioritize your studying to focus on the most important and
frequently tested rules. Ultimately, this method promotes efficiency in studying for the bar
exam.
Best of luck on the exam!
– The SmartBarPrep Team
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01
AGENCY
A.
H
Agency Relationships
Creation of Agency Relationship
B.
H
Definition – Agency is a fiduciary relationship, where a
person or entity (the agent) acts on behalf of another
(the principal).
M
Types of Agency Relationships
− Universal Agent – has broad authority,
authorized for ALL acts the principal can
perform.
− General Agent – has authority to conduct a
series of transactions over a period of time.
− Special Agent – has limited authority either for
a specific act/transaction OR a specified period
of time.
An agent has actual authority when acting within their
reasonable understanding of authority, even if the
principal later shows the agent was mistaken.
H
A principal holds the agent out as having authority
when he:
a) gives a position or title indicating authority;
b) previously held the agent out and did not
published a revocation; OR
c) cloaked the agent with the appearance of
authority.
*Continues until the principal communicates termination
to third-parties.
Death of Principal:
Common Law → agency is terminated regardless of
whether the third-party has notice of principal’s death.
Some States → NOT terminated until the third-party has
notice of the death.
Apparent Authority is NOT applicable if the third-party
had knowledge that the agent did not have actual
authority.
Agency Contracts – Principal can terminate the agent
at any time.
− BUT, principal may be liable for damages if
agent is terminated prior to the expiration of a
contract (unless the agent materially breached
contract).
Unidentified/Partially Disclosed Principal → Apparent
Authority CAN exist.
Undisclosed Principal → Apparent Authority CANNOT
exist.
M
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Apparent Authority – A principal is bound to a contract
entered into by its agent if the agent had apparent
authority.
Apparent Authority exists when:
1) A third-party reasonably believes the agent
has authority to act on behalf of the principal;
AND
2) That belief is traceable from the principal’s
manifestations (principal holds the agent out as
having authority).
Termination of Agency Relationship
An agency relationship terminates by:
a) A manifestation by either party that the
relationship is terminated;
b) Expiration of a specified term of authority;
c) Death of principal or agent (by operation of law);
OR
d) Incapacity of the principal or agent (by
operation of law) – except if a durable power of
attorney exists.
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Actual Authority – A principal is bound to a contract
entered into by its agent if the agent had actual authority.
Two Types – occurs if:
Express Authority → by principal’s explicit directions to
the agent (either orally or in writing).
Implied Authority → either:
a) Action is necessary to carry out the agent’s
express authorized duties;
b) Agent acted similarly in prior dealings with the
principal; OR
c) It’s customary for an agent in that position
(silence/acquiescence can give rise to a
reasonable belief of authority in the future).
Elements – An agency relationship exists if there is:
1) Assent – a formal or informal agreement;
2) Benefit – the conduct primarily benefits the
principal; AND
3) Control – the principal has the right to control
the agent (control doesn’t need to be
significant).
*The characterization of the relationship by the parties is
irrelevant.
L
Contractual Liability of Principal & Agent
Inherent Agency Power – Protects third-parties when
dealing with agents even if there is no actual or apparent
authority.
1
01
AGENCY
C.
Two Groups of Inherent Agency Power:
First Group → Subjects an employer to liability when:
1) an agent acts in furtherance of employer’s
business; AND
2) his conduct harms a third-party.
H
The concept of Inherent Agency Power was eliminated
in the Restatement (Third) of Agency.
Ratification – Makes the principal liable for an agent’s
contract entered into without authority.
Ratification occurs when the Principal:
1) Has knowledge of all material facts or contract
terms; AND
2) Assents (approves) to the same through words
or conduct.
*Agent also remains liable if principal was not disclosed.
Rest. 2nd → Undisclosed principal CANNOT ratify.
Rest. 3rd → Undisclosed principal CAN ratify.
H
Agent’s Contractual Liability
Generally, an agent has NO liability if they:
1) Fully disclose the principal to a third-party; AND
2) Act within their scope of authority.
Agent will be liable if:
a) Conduct was unauthorized; OR
b) Principal was undisclosed or partially disclosed
(no name given) to the third-party.
Agent may seek Indemnification from a principal if:
1) agent is liable; AND
2) his conduct was authorized.
Employee vs. Independent Contractor – Primary
focus is whether the principal had the right to control
the manner and method in which the job was performed.
Factors → courts analyze the following to determine if a
person is an employee or independent contractor:
1) type of work;
2) pay (hourly vs. per project);
3) who supplied the equipment/tools;
4) degree of supervision;
5) degree of skill required;
6) if the work benefits the employer’s business;
7) extent of principal’s control over work details;
8) whether agent/contractor is engaged in a distinct
business;
9) length of time employed/engaged;
10) characterization & belief of relationship; and
11) whether agent was hired for a business purpose.
Second Group → If an agent violates the principal’s
orders and there is no actual/apparent authority, inherent
agency applies when:
1) An agency relationship exits; AND
2) Agent engaged in acts that are generally of a
kind that would fall within his actual authority,
but for the violation of principal’s instructions.
M
Vicarious Liability for Agent’s Torts
H
Respondeat Superior Doctrine – An employer is liable
for an employee’s negligent acts if the employee was
acting within the scope of the employment.
Employee acts within Scope of Employment when:
a) Performing work assigned by the employer; OR
b) Engaging in a course of conduct subject to the
employer’s control.
Time, Place, & Purpose Test – To determine the scope
of employment, courts analyze whether the conduct:
i) Is of the kind the employee is employed to
perform;
ii) Occurs substantially within the authorized time
and space limits; and
iii) Is motivated (in whole or part) to serve the
employer.
Intentional Torts – are generally outside the scope.
EXCEPTIONS:
a) Act was specifically authorized by employer;
b) Act was driven by a desire to serve employer;
OR
c) Act was the result of naturally occurring friction
from the type of employment.
Not Within Scope of Employment – Conduct is NOT
within the scope if it’s unrelated and not intended to
serve any purpose of the employer.
− BUT see exception below.
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2
01
M
M
AGENCY
Liability if Respondeat Superior Doctrine is
Inapplicable – An employer will be liable for acts
outside the scope of employment if:
a) Employer intended the conduct / consequences;
b) Employer was negligent or reckless in selecting,
training, supervising, or controlling the
employee;
c) It is a non-delegable duty; OR
d) Employee had apparent authority, the
appearance of authority enabled the tort, and
the third-party reasonably relied on such
authority.
D.
H
Fiduciary Duties Between Principal & Agent
Duties Owed by Agent to the Principal:
1) Duty of Care → duty to use reasonable care
when performing agent’s duties.
2) Duty of Loyalty → duty to act solely and loyally
for the principal’s benefit.
3) Duty of Obedience → duty to obey all
reasonable directions of the principal.
Liability for Independent Contractors – Generally, an
employer/principal has NO liability for an Independent
Contractor’s torts.
Exceptions:
1) Inherently Dangerous Activities.
2) Non-delegable duty owed by principal.
3) Estoppel – the principal holds out the contractor
as his agent, third-party reasonably relied on
contractor’s skill, and the third-party suffered
harm.
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3
02
PARTNERSHIPS
Filing DOES NOT create a new partnership (if a GP or
LP existed prior to filing).
− The Pship remains liable for any obligations
before it became an LLP.
Definitions
Pship = Partnership
UPA = Uniform Partnership Act
RUPA = Revised Uniform Partnership Act
ULPA = Uniform Limited Partnership Act
RULPA = Revised Uniform Limited Partnership Act
A.
H
Amending the Pship Agreement – Unless agreed
otherwise, the Pship agreement may be amended at any
time with a unanimous vote.
Creation of Partnerships
General Partnership (GP) – is created when:
1) two or more persons;
2) as co-owners;
3) carry on a business for profit.
*Intent to form a partnership is NOT required.
B.
H
A joint venture or sharing in gross profits DOES NOT
automatically create a partnership.
Ordinary Course of Business = normal and necessary for
managing the business.
Limited Partnership (LP) – is composed of limited
partner(s) AND at least one general partner.
Implied Actual Authority (Incidental Authority) – A
partner may take actions reasonably incidental or
necessary to achieve the partner’s authorized duties.
Formation – An LP is formed upon filing a Certificate of
Limited Partnership with the Secretary of State, which
must include:
1) name of Pship;
2) address of Pship;
3) name and address of each partner;
4) whether the Pship is an LLP; AND
5) signed by a general partner.
M
Apparent Authority – A partner has apparent authority
for acts:
a) conducted within the ordinary course of the
Pship business; OR
b) of the kind carried on by the Pship.
BUT, a partner’s act will NOT bind the Pship when the:
1) Partner lacked authority; AND
2) Third-party knew (or received notice) of a lack of
authority.
Limited Liability Partnership (LLP) – In an LLP, all
partners have limited personal liability.
To Become an LLP:
1) It must be approved by the same vote necessary
to amend the Pship Agreement; AND
2) A Statement of Qualification must be filed with
the Secretary of State containing:
i. name and address of Pship;
ii. statement that the Pship elects to
become an LLP; and
iii. a deferred effective date (if any).
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Authority to Bind the Partnership – A partner is an
agent of the Pship, and generally has authority to bind
the Pship for its business (including contracts).
− To bind the Pship, the partner MUST have
authority.
Express Actual Authority – A partner receives such
authority from the partners.
− Acts within the ordinary course of business
→ must be approved by a majority of the
partners.
− Acts outside the ordinary course of business
→ must be approved unanimously.
− If Pship Agreement is silent → a partner has
authority for usual & customary matters
UNLESS he knows: (a) other partners might
disagree, or (b) that consultation is appropriate.
Creditor vs. Partner – A person who receives a share of
the profits is presumed to be a partner UNLESS the
payment is received in payment:
a) of a debt;
b) for wages as an employee or independent
contractor;
c) of rent;
d) of an annuity or retirement benefit;
e) of interest/loan charges; OR
f) for the sale of goodwill of a business.
M
Power & Authority of Partners
M
Authority to Bind the Partnership After Dissolution –
A partner’s authority is limited after dissolution.
Actual Authority → limited only to acts appropriate for
winding up the business.
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02
PARTNERSHIPS
Apparent Authority → a partner has apparent authority
to bind the Pship if the:
1) Partner’s acts would have normally bound the
Pship; AND
2) Third-party did not have notice of dissolution.
C.
H
−
Liability of Partners
Liability of General Partners:
M
Personal Liability → General partners are personally
liable for ALL obligations of the Pship UNLESS: (a)
otherwise agreed by claimant; or (b) provided by law.
− UPA (1997) → partners are jointly and severally
liable.
− UPA (1914) → partners are jointly liable.
Incoming Partners → Partners admitted into an existing
partnership are NOT liable for obligations incurred prior
to their admission.
− BUT, incoming partners risk losing their capital
contributions to the Pship
Generally, a judgment creditor CANNOT levy execution
of a judgment for a Pship debt against a partner unless:
1) The partner is found personally liable;
2) A judgment is rendered against the partner;
AND
3) Pship assets are exhausted/insufficient to satisfy
the judgment.
Liability of Limited Partners – Limited partners are
NOT personally liable for obligations of the LP.
D.
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Rights of Partners Among Themselves
L
Sharing of Profits and Losses – Unless otherwise
agreed, profits are shared equally and losses are
shared in the same ratio as profits.
− Any partner who pays more than his fair share in
losses is entitled to contribution from the other
partners.
M
Right to Management & Control – Unless otherwise
agreed, each partner has equal rights in the
management and control of the business.
− A disagreement for ordinary Pship business
need only be approved by a majority of the
partners.
− Acts outside the ordinary course of business
MUST be approved unanimously.
M
Transfer of Partnership Ownership:
A partner can only transfer:
1) his interest in the share of profits and losses;
AND
2) the right to receive distributions.
Exceptions:
a) Liable for their own misconduct;
b) At risk of losing their capital contribution to the
Pship; OR
c) May become personally liable if the partner
participates in management (depends on the
jurisdiction).
Liability for Participating in Management:
− ULPA (2001) → no personal liability created
when a limited partner participates in the
management or control of the business.
− ULPA (earlier versions) → personal liability is
created for participating in management (but
Liability of Limited Liability Partners – Under RUPA, a
partner in an LLP is NOT liable for partnership
obligations.
But a partner in an LLP is liable:
a) for their own misconduct;
b) when the partner signs a personal guarantee for
an obligation; OR
c) for obligations incurred before the Pship became
an LLP.
Judgment Enforcement Against a Partner’s Personal
Assets – A judgment against the Pship is NOT a
judgment against the individual partner(s).
− BUT, a judgment may be sought against the
Pship and individual partners in the same action.
M
removal of a director is not considered
participation in management and control).
RULPA → personal liability created, BUT a
partner is liable only to persons who transact
business with the LP reasonably believing that
the limited partner is a general partner.
▪ RULPA has a safe harbor provision
excluding certain acts from liability.
Any other rights CANNOT be transferred, unless the
partnership agreement provides otherwise.
− ALL partners MUST CONSENT for an assignee
of a partnership interest to become a partner.
M
Right to Partnership Property – All property acquired
by a Pship (or with Pship assets) is owned by the
Pship, not the partners individually.
− Partners have an equal right to use property for
Pship purposes.
2
02
PARTNERSHIPS
−
c) A knowing violation of law.
*If a partner breaches, he may be held personally liable
to the Pship for any losses.
Personal use of Pship property requires the
consent of the other partners.
Property acquired in the name of the partner is
presumed to be separate property as long as:
1) no Pship assets are used to acquire it; AND
2) title to the property does not reference the
Pship.
Judgment Solely Against a Partner → CANNOT be
satisfied with Pship property because the partner has no
ownership interest in Pship property.
− However, a creditor may seize the partner’s
financial interest in the Pship.
L
M
H
Remuneration (Payment for Partner’s Services)
A partner is NOT entitled to remuneration for services
performed for the Pship UNLESS:
a) There is an agreement to the contrary; OR
b) It’s for reasonable compensation for services
rendered in winding up the Pship business.
E.
M
A breach of the duty has been found in the following
situations:
▪ Violating an agreement or policy of the Pship.
▪ Failing to thoroughly investigate facts before
entering into contracts (if it’s gross negligence).
▪ Acting outside the scope of Pship business
without the consent of the other partners.
Under RUPA, a partner must:
1) Account for any property, profit, or benefit
derived from Pship property or business
(including refraining from appropriating Pship
assets);
2) Not have an interest adverse to the Pship (a
conflict of interest); AND
3) Not compete with the Pship (unless agreed
otherwise).
Special Rules for Limited Partnerships
Management & Control in a LP
General Partner → Has full management rights and
control.
Limited Partner → Has NO say or control as to how the
LP is run, and DOES NOT have the right to manage or
control day-to-day business.
− Generally, they are passive and have voting
rights only in extraordinary situations (i.e. sale of
Pship or all its assets, amending Pship
agreement, or admitting a new partner).
If a partner breaches, he may be held personally
liable to the Pship for any losses.
BUT, a partner is NOT liable if:
1) He fully discloses information; AND
2) Either:
a) the Pship agreement is amended; OR
b) all partners consent.
If reasonable, the Pship agreement MAY eliminate or
alter a duty of loyalty.
Limited Partner’s Right to Inspect Records
RULPA → Limited partners have the right to inspect and
copy records the LP is legally required to keep.
Fiduciary duties apply during dissolution (except the duty
not to compete).
Upon reasonable demand, a limited partner may obtain:
1) True and full info regarding the state of the
business and financial condition;
2) LP’s tax returns; and
3) Any info that’s just and reasonable.
*These rights may be exercised for any purpose.
F.
H
Partnership Opportunity → is one that:
1) is closely related to the Pship’s existing or
prospective line of business;
2) would competitively advantage the Pship;
AND
3) the Pship has the financial ability, knowledge,
and experience to pursue.
Duties Owed by Partners
Duty of Care – A partner owes the fiduciary duty of care
to the Pship and other partners.
Under RUPA, a partner only breaches the duty of
care if he engages in:
a) Grossly negligent or reckless conduct;
b) Intentional misconduct; OR
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Duty of Loyalty – A partner owes the fiduciary duty of
loyalty to the Pship and other partners. This requires a
partner to act in the best interests of the Pship.
M
Duty to Provide Full Information
UPA → Partners shall render (on demand by any
partner) true and full information of all things affecting
the Pship.
RUPA → Partners shall disclose (without demand) full
information concerning the Pship’s business and affairs.
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02
PARTNERSHIPS
If a partner breaches this duty, he may be held
personally liable to the Pship for any losses.
L
Dissolution of a Pship for a Definite Term occurs:
a) within 90-days after a partner’s dissociation by
death or wrongful dissociation, if it’s the express
will of at least half of the remaining partners to
wind up (rightful dissociation constitutes the
expression of the partner’s will to wind-up);
b) upon the express will of all partners to wind up;
OR
c) upon the expiration of the term or completion of
the Pship’s purpose.
Action Against a Partner for Misconduct – The Pship
can maintain an action against a partner for misconduct.
A partner can also maintain a direct action against
another partner to enforce the partner’s right, including
an action for violating fiduciary duties.
− BUT, a partner CANNOT maintain a derivative
action.
G.
H
Does Dissociation Cause Dissolution?
Dissociation & Dissolution
Under RUPA (2013):
− Dissolution may be rescinded by the
affirmative vote or consent of ALL remaining
partners to continue the business.
− Buyout → In such instance, the dissociated
partner is entitled to a buyout of their interest
(value of interest = greater of liquidation or going
concern value + interest).
*Apply RUPA (2013) unless instructed otherwise.
Dissociation (Withdrawal of a Partner) – A partner
may dissociate (withdraw) from the Pship at any time
upon notice.
Dissociation Events – A partner becomes dissociated
from the Pship upon:
a) The partner providing notice of their express will
to withdraw;
b) The occurrence of an agreed upon event;
c) Expulsion pursuant to the Pship agreement;
d) Expulsion by unanimous vote if it’s (i) unlawful to
carry on the business with that partner or (ii) he
transferred all of his Pship interest (other than
for security purposes);
e) Judicial expulsion;
f) Bankruptcy;
g) Incapacity or death;
h) Appointment of a personal representative or
receiver; OR
i) Termination of an entity partner (who is not an
individual, pship, corporation, trust, or estate).
Wrongful Dissociation – Dissociation is deemed
wrongful if:
a) It’s in breach of an express provision of the
Pship agreement; OR
b) Before the completion of an agreed upon term or
undertaking.
*A wrongfully dissociated partner CANNOT participate in
management or the winding up process.
A partner may be liable to the Pship (and other partners)
for damages caused by his wrongful dissociation.
H
Dissolution of a General Partnership
Dissolution Events – Unless agreed otherwise,
dissolution occurs upon:
a) Notice of a partner’s express will to withdraw;
b) Occurrence of an agreed upon event;
c) The business becoming unlawful; OR
d) Judicial dissolution.
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Under RUPA (1997):
− If wrongful dissociation → ALL remaining
partners may waive their right to windup/terminate the Pship, and instead choose to
continue the Pship by buying out the dissociated
partner’s interest.
− If rightful dissociation → The dissociated
partner is allowed to vote on whether to waive
winding-up and termination of the Pship.
Regardless, the other partners MAY choose to
continue the business for a reasonable amount
of time.
Under UPA (1914) → The Pship MUST be wound up and
terminated (regardless if rightful or wrongful).
− But, all partners who did not wrongfully cause
dissolution may choose to continue the business
in the same name.
L
Dissolution of a Limited Partnership
A non-judicial dissolution of an LP occurs upon:
a) Happening of an event specified in the Pship
agreement;
b) Consent of (i) all general partners and (ii) limited
partners owning a majority interest;
c) After the dissociation of a general partner either
(i) upon consent of the partners owning majority
rights to receive distributions (if LP has at least 1
general partner), or (ii) the passage of 90 days
after the dissociation (unless the LP admits at
least 1 general partner);
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PARTNERSHIPS
d) 90 days after dissociation of the last limited
partner, unless the LP admits at least one limited
partner; OR
e) the filing of a declaration of administrative
dissolution by the Secretary of State.
M
Winding Up & Termination of a Partnership
Dissolution vs. Winding Up vs. Termination:
− Dissolution → Occurs upon the occurrence of
any specified statutory event (see above).
− Winding Up → Is the period between
dissolution and termination, in which assets are
liquidated to satisfy creditors.
− Termination → Occurs when the winding up
process is complete. The real end of the Pship,
in which the Pship ceases to exist.
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Distribution of Partnership Assets – During the
winding up process, the Pship assets are converted to
cash and distributed in the following order:
1) Outside creditors.
2) Inside creditors (partners who loaned money to
the Pship).
3) Partner’s capital contributions.
4) Any remaining profits or surplus goes to the
partners equally (unless agreed otherwise).
*If there are insufficient assets to satisfy creditors, the
loss will be divided among the partners.
5
03
CORPORATIONS & LLC’S
−
Definitions
BoD = Board of Directors
SH = Shareholder
RMBCA = Revised Model Business Corporation Act
RULLCA = Revised Uniform Limited Liability Company
Act
A. Formation of a Corporation
M
B. Formation of a Limited Liability Company
L
Date of Corporate Existence → begins on the date the
Articles of Incorporation are properly filed with the
Secretary of State, unless a delayed effective date is
specified.
− RMBCA → DOES NOT allow an earlier effective
date.
Operating Agreement – Governs: (1) the relations
between the members and LLC; (2) the rights/duties of
managers; (3) activities and affairs of the LLC; and (4)
any means and conditions for amending the Operating
Agreement.
De Jure Corporation = a properly formed corporation.
C. Pre-Formation Contract Liability
M
Bylaws = rules and regulations adopted by the BoD that
govern the internal operations of a corp.
− RMBCA → bylaws may contain any provision
not inconsistent with the: (a) Articles of
Incorporation; OR (b) law of the jurisdiction.
L
Amending the Bylaws:
Shareholders → may amend or repeal.
Board of Directors → may amend or repeal UNLESS:
a) Articles of Incorporation exclusively reserve the
power to SH’s; OR
b) The SH’s (in amending a bylaw) expressly
provide that the BoD cannot amend or reinstate
that specific bylaw.
*If a bylaw deals with director nomination procedures,
the BoD retains power to safeguard the voting process,
BUT cannot repeal a shareholder approved bylaw.
L
Powers of a Corporation – A corp. has the power to do
all things necessary or convenient to carry out its
business and affairs.
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Liability of Promoter – A promoter acts on behalf of a
corp. that has not yet been formed.
A promoter is personally liable when:
1) he purports to act as or on behalf of a corp.;
AND
2) knows no corp. was formed.
The Articles of Incorporation control if there is a
conflict with the Bylaws.
M
Formation of an LLC
Articles of Organization – An LLC is formed when the:
1) Articles of Organization (a.k.a. Certificate of
Formation) is properly filed with the Secretary of
State; AND
2) LLC has at least one member.
Formation of a Corporation
Articles of Incorporation – are filed to form a
corporation, and MUST contain:
1) corporate name;
2) number of shares the corp. is authorized to
issue;
3) corp.’s address and name of the initial registered
agent; AND
4) name and address of each incorporator.
Includes → lawsuits, own/lease real property,
contracts, borrow/loan money, make
investments, involvement with other businesses,
fix compensation/salaries, charitable donations,
pay/engage in lobbying.
A promoter remains personally liable for a pre-corp.
contract even if the corp. subsequently adopts the
contract.
− BOTH the corp. and the promotor will be liable if
adopted.
A promoter is NOT liable if:
a) there is a subsequent novation; OR
b) the contract explicitly provides that the promoter
has no personal liability.
M
Liability of Corporation – A corp. is NOT liable on a
contract made by a promoter UNLESS the corp.
expressly or impliedly adopts the contract postincorporation.
− Express Adoption = BoD action or reference in
corp.’s formation documents.
− Implied Adoption = Corp. (1) knows / has
reason to know the material terms of the
contract; AND (2) accepts some benefit of the
contract.
1
03
L
CORPORATIONS & LLC’S
Defective Incorporation & Owner Liability – If corp.
formation is defective, the owners may be personally
liable for corp. contracts and obligations.
SH / Member Liability for Own Torts – Even if the
court does not pierce the veil, a person is ALWAYS
liable for their own torts.
EXCEPTIONS:
RMBCA → Prevents personal liability unless the person:
1) purports to act as or on behalf of a corp.,
2) knowing that no corp. was formed.
E. Corporate Finance
L
De Facto Incorporation → Exists when the entity:
1) made a good faith attempt to incorporate;
2) is eligible to incorporate; AND
3) took action that it considered itself a corp.
*This doctrine only prevents personal liability of persons
unaware that a corp. wasn’t properly formed.
If only one class of shares is authorized → all shares will
have both the power to vote and the power to receive
the net assets upon dissolution.
Incorporation by Estoppel → A person/entity may be
estopped from denying that a business is a corp. when it
treated the business as such.
− This exception does not apply to tort actions.
If more than one class of shares is authorized → the
classes must be described in the Articles of
Incorporation. All shares within a class MUST have the
same rights, privileges, and restrictions.
− BUT, the RMBCA allows variations within a
class/series if expressly set forth in Articles of
Incorporation.
D. Personal Liability & Piercing the Veil
H
Personal Liability & Piercing the Veil
SH Personal Liability – Generally, SH’s are NOT
personally liable for corp. liabilities and obligations.
− BUT, a court may pierce the corporate veil to
impose personal liability in certain situations.
Piercing the Corporate Veil – Courts may disregard the
corporate form, and hold an individual shareholder (or
director / officer) personally liable for actions taken on
behalf of the corp. when:
a) Corp. is acting as the alter ego of the
shareholder – when he/she utilizes the corp. for
personal reasons;
b) There is a failure to follow corporate
formalities;
c) Corp. is inadequately capitalized at its
inception; OR
d) To prevent fraud.
*Courts are more likely to pierce it tort actions than in
contract disputes.
Passive Investors → are generally NOT liable, even if a
court pierces the veil against an active SH/Member.
Piercing the Veil for LLC’s – Courts generally apply the
same factors to pierce the veil of an LLC to hold
members or managers liable.
− BUT the failure to follow formalities is NOT a
ground to pierce the LLC veil.
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Common & Preferred Shares
Common Shares → Provide SH’s with voting rights.
Preferred Shares → Usually DO NOT have voting
rights.
− Generally, provide a SH the preferred right to an
asset distribution before SH’s with common
shares.
M
Authorized, Outstanding, & Reacquired Shares
Authorized Shares → The maximum number of shares
the corp. may issue.
Outstanding Shares → The total number of shares
issued by the corp. and held by the SH’s.
− Each share is entitled to one vote (unless
otherwise specified).
Reacquired Shares (a.k.a Treasury Shares) → These
shares are considered authorized, but are NOT
outstanding (because the corp. owns them, not the
SH’s).
− Reacquired shares are NOT allowed to be
voted.
L
Consideration in Exchange for Shares – Under the
RMBCA, shares may be issued for almost any type
of consideration.
− Includes → money, tangible or intangible
property, past performance of services, future
promises of service or payment of
money/property.
The BoD determines the value of non-monetary
consideration. Absent fraud or bad faith, their
determination is conclusive.
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03
M
CORPORATIONS & LLC’S
Dividends & Distributions to SH’s – Distributions are
declared at the discretion of the BoD (their decisions
are protected under the Business Judgment Rule).
− Once a dividend is declared, the SH has a legal
right to the distribution.
Notice – Must be given to all SH’s entitled to vote AND
requires:
1) At least 10 days advance notice of the meeting
(but not more than 60 days);
2) The meeting’s date, time, and place; AND
3) A description of the meeting’s purpose (for
special meetings only).
*If the meeting involves a fundamental change, ALL
shareholders (whether or not entitled to vote) are entitled
to notice.
SH’s DO NOT have the right to compel a distribution,
unless such right is expressly granted in the Articles of
Incorporation.
− BUT, a court will interfere and compel a
distribution upon a showing: (1) of bad faith or
dishonest purpose; AND (2) that funds were
available.
Waiver of Notice – a SH may waive notice:
a) in a signed writing; OR
b) by attending the meeting and not objecting at
the beginning of it (or not objecting to a matter
not described in the notice).
F. Shareholders
M
H
SH Meetings – Right to Vote & Record Date
Only registered shareholders on the record date are
entitled to vote at the shareholders meeting (even if a
SH sells the shares before the meeting – unless a proxy
is given to the buyer).
− Record date CANNOT be more than 70 days
prior to the SH meeting.
Quorum & Voting
Quorum – Needed for the SH’s to take action at a
meeting, and requires a majority of the shares entitled
to vote.
Voting – If a quorum exists, then action on a matter
(other than election of directors) is approved by a
majority of votes cast in favor UNLESS the Articles of
Incorporation requires a greater number.
− Each outstanding share gets 1 vote (unless the
Articles of Incorp. states otherwise).
Proxy Voting & Revocation of a Proxy
Proxy – A proxy grants the proxy holder the ability to
vote shares as the proxy holder deems appropriate.
− Must be signed on either an: (a) appointment
form; OR (b) electronic transmission.
− Only valid for 11 months.
L
M
L
Election of Directors
Proxy Agreements are freely revocable by the
shareholder, even if the proxy states that it’s irrevocable.
− Exception → NOT revocable if proxy: (1) is
coupled with an interest or legal right; AND (2)
states it’s irrevocable.
Plurality Voting – Candidates who receive the most
votes are elected to the BoD, as long as there is a
quorum of SH’s present.
− A majority of votes is NOT necessary to be
elected (in most states).
Annual Meetings, Special Meetings, & Notice
Cumulative Voting – Articles of Incorporation or Bylaws
may provide for cumulative voting to elect Directors.
Annual Meetings – Corp. MUST hold an annual
meeting of the SH’s at a date/time stated in the bylaws.
− Directors are usually elected at the annual
meeting.
Special Meetings – May be called by:
a) The BoD;
b) Persons authorized under the Articles of
Incorporation; OR
c) SH’s holding at least 10% of all votes entitled to
be cast at the meeting.
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Under cumulative voting a SH’s total number of votes =
shares owned x director spots open.
− Example → 100 shares owned x 3 BoD spots =
300 votes
A SH may cast ALL of his votes for one director nominee
(i.e. 300 votes) rather than being limited to a maximum
number of votes for each nominee.
Under cumulative voting, a director can be removed
ONLY IF the number of votes for removal are greater
than those needed to elect him.
3
03
M
CORPORATIONS & LLC’S
SH’s Right to Inspect Books and Records – Under
the RMBCA, a SH has the right to inspect and copy the
corp.’s accounting records, excerpts of BoD meetings,
and the record of shareholders if:
1) made during regular business hours at the
principal office;
2) with five-days written notice;
3) made in good faith and for a proper purpose;
4) described the purpose with particularity; AND
5) the requested records are directly connected
with the purpose.
A SH may inspect the following records without
providing a proper purpose:
▪ Articles of Incorporation;
▪ Bylaws;
▪ BoD Resolutions;
▪ Minutes of SH meetings (for past 3 years);
▪ Name and business addresses of current
directors and officers; and
▪ Most recent annual report.
L
Shareholder Voting Agreements
RMBCA → a SH may sign an agreement providing how
they will vote their shares.
− A SH Agreement is specifically enforceable,
and a claim for breach of contract may be
brought to enforce this right.
Waiver – A director may waive notice:
a) in a signed writing; OR
b) if the director attends the meeting (unless he
objects at the beginning of the meeting or upon
his arrival and does not vote).
L
Board Action by Written Consent – The BoD may take
action without a meeting if:
1) all directors sign a consent describing the action;
AND
2) deliver it to the corp.
L
Removal of Directors
RMBCA → SH’s may remove a director with or without
cause UNLESS the Articles of Incorporation requires
cause.
Common Law → could only be removed for cause.
H. Officers
The BoD may elect individuals as Officers to manage the
day-to-day business of the corp.
M
Actual Authority – Officers have authority to act
consistently with their duties:
a) as outlined in the Bylaws; OR
b) as provided by the BoD.
G. Directors
L
Apparent Authority – Officers may bind the corp. when:
1) a third-party reasonably believes the
person/entity has authority; AND
2) that belief is traceable to the corp.’s
manifestations (holding an officer out as having
authority).
BoD Meetings – The BoD can act only if a quorum is
present at the time when a vote is taken.
Quorum for BoD Action → a majority of directors is
necessary to make a quorum, UNLESS a higher or lower
number is required by the Articles of Incorporation.
− If the Articles of Incorporation lowers the
number, it cannot be less than 1/3 of the
directors.
The BoD may permit participation of a director by any
means of communication, BUT all directors must be able
to simultaneously hear each other during the meeting.
L
Voting – If a quorum is present, then an act is approved
by the affirmative vote of a majority of directors
present at the meeting.
− UNLESS a greater number is required by the
Articles of Incorporation or Bylaws.
L
Notice & Waiver
Regular Meeting → may be held without notice.
Special Meeting → requires at least 2-days’ notice (of
the date, time, and place of the meeting)
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Authority of Officers
President → Generally, has authority for matters within
the ordinary course of business (but not extraordinary
acts).
Secretary → Generally, has authority to maintain and
authenticate records of the company.
L
Removal of Officers – Officers may be removed at any
time with or without cause by:
a) The Board of Directors;
b) An Officer who appointed such Officer (unless
the bylaws or BoD provide otherwise); OR
c) Any other Officer, if authorized by the BoD or
Bylaws.
4
03
CORPORATIONS & LLC’S
e) Without general voting rights, but with
preferential rights to distributions.
I. Members & Managers
L
L
Management of an LLC
Member-Managed LLC → An LLC is presumed to be
member-managed.
Manager-Managed → To be manager-managed, the
Operating Agreement must state that the LLC will be
manager-managed.
− A manager-managed LLC is run by an elected
group of managers (similar to a BoD).
SH’s of common stock DO NOT have preemptive rights
with respect to preferred shares, unless the shares are
convertible into common shares.
L
Authority of Members / Managers – Under RULLCA
and general agency principles, each member has
authority to bind the LLC for business purposes
(including contracts).
Express Actual Authority – Members receive such
authority from the Operating Agreement or from the
managing members/managers.
− Acts within the ordinary course of business →
need only be approved by a majority of the
members.
− Acts outside the ordinary course of business →
may be undertaken only with the consent of ALL
members.
Implied Actual Authority – Have authority to take
actions that are reasonably incidental or necessary for
the person’s authorized duties.
Apparent Authority – Each member of an LLC can bind
the LLC if the action is made in the ordinary course of
business UNLESS:
1) the member lacked authority; AND
2) the other party had notice of a lack of authority.
Managers in a manager-managed LLC have similar
authority.
J. Close Corporations & Control Devices
L
Preemptive Rights – Allows an existing SH to maintain
her % of ownership by being offered the opportunity to
purchase shares issued for cash before outsiders are
permitted to purchase.
RMBCA → SH’s DO NOT enjoy preemptive rights
unless explicitly granted in the Articles of Incorporation.
Preemptive rights DO NOT apply to shares issued:
a) As compensation;
b) To satisfy conversion/option rights created to
provide compensation;
c) Within 6 months of incorporation;
d) For consideration other than cash; OR
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Restrictions on Share Transfers – The Articles of
Incorporation, Bylaws, and/or Shareholder Agreements
MAY impose restrictions on the transfer of shares:
a) for any reasonable purpose;
b) to preserve exemptions under federal/state
securities law; OR
c) to maintain status when it’s dependent on the
number/identity of SH’s.
*An absolute restraint on the transfer of shares is
INVALID.
Reasonable restrictions MAY be enforced against the
transferor.
− But, they CANNOT be enforced against the
transferee unless: (a) the restriction was
conspicuously noted on the stock certificate; OR
(b) the transferee had actual knowledge of the
restriction.
K. Fiduciary Duties
H
Duty of Care – Directors are fiduciaries of the corp., and
as such owe a duty of care.
This means they must discharge their duties:
1) in good faith;
2) with the reasonable belief that they are acting in
the best interests of the corp.; AND
3) with the care that a person in a like position
would reasonably believe appropriate under like
circumstances.
*If the 3-part test above is met, then a Director is NOT
liable.
Common Law → the above test was known as the
Business Judgment Rule (BJR).
A court will NOT disturb decisions subject to the BJR
standard if a rational business purpose exists.
Directors must be reasonably informed on the
decisions they make.
− They MAY rely on the reasonable advice of
advisors if: (1) the reliance was reasonable,
AND (2) the advisor or committee was qualified.
If a director breaches the duty of care, he may be
personally liable to the corp. for any losses that result.
5
03
H
CORPORATIONS & LLC’S
Forbids a Director from:
a) Entering into conflicting interest transactions;
b) Usurping a corporate opportunity;
c) Competing with the corporation; OR
d) Trading on inside information.
H
−
Duty of Loyalty – Directors must act in the best
interests of the corp. and without personal conflict.
M
Duty of Care → a member must act:
1) with the care that a person in a like position
would reasonably exercise under the
circumstances; AND
2) with a reasonable belief to be in the best
interests of the company.
Duty of Loyalty → Includes the duty to:
1) account for any property, profit, or benefit
derived from the LLC’s business/property;
2) refrain from having an adverse interest when
dealing with the LLC (unless the transaction was
fair); AND
3) refrain from competing with the LLC (before
dissolution).
*EXCEPTION → All members authorize an
act/transaction after receiving full disclosure.
Manager-Managed LLC’s → The managers owe
fiduciary duties, not the members.
Usurping a Corporate Opportunity – Is a breach of the
duty of loyalty UNLESS:
1) First presents it to the corp.’s BoD; AND
2) BoD decides not to pursue the opportunity.
*Showing that the corp. was not financially able to take
the opportunity is NOT a defense.
The duties are the same as a member-managed LLC.
− BUT, two notable differences for the Duty of
Loyalty:
▪ Only the members (not the managers)
may authorize an act/transaction that
would otherwise violate the duty of
loyalty.
▪ Managers must refrain from competing
with the LLC until winding up is
completed (the duty does not end upon
dissolution).
A corporate opportunity is any opportunity that:
a) the corp. has an interest/expectancy in; OR
b) is in the corp.’s line of business.
*A parent corp. has some freedom in allocating an
opportunity within a corporate group.
L
L
Fiduciary Duties of Shareholders – SH’s generally DO
NOT owe fiduciary duties to fellow SH’s.
− But, SH’s in a close-corporation owe the
fiduciary duties of loyalty and good faith & fair
dealing to minority SH’s.
L
Restricting Fiduciary Duties – Corporations
RMBCA → The Articles of Incorporation MAY eliminate
or limit the personal liability of a director for actions
taken or not taken.
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Fiduciary Duties Owed by LLC Members/Managers
Member-Managed LLC’s → Members owe the duty of
care and loyalty to both the company and other
members.
Conflicting Interest Transactions – Is a breach of the
duty of loyalty UNLESS:
a) approved by a majority of disinterested directors
after full disclosure of all relevant material facts;
b) approved by a majority of disinterested
shareholders; OR
c) the transaction as a whole was fair to the corp.
at the time it was entered into (fair price +
beneficial to corp. + fair dealing).
*The Business Judgment Rule DOES NOT apply/protect
directors financially interested in a transaction or who
engaged in fraud/illegality.
A conflict occurs when a director/officer (or their family
member):
a) is a party to the transaction;
b) has a beneficial interest in the transaction or is
so closely linked to it that the director’s judgment
may reasonable be affected; OR
c) is involved with another entity that is
conducting business with the corp. and that
transaction would normally be brought before
the BoD.
L
BUT, the following CANNOT be limited: (1)
financial benefits improperly received; (2)
intentional infliction of harm to the corp. or SH’s;
(3) unlawful dividends; or (4) an intentional
violation of criminal law.
Restricting Fiduciary Duties – LLC’s
RULLCA → the Operating Agreement may do the
following so long as it’s not manifestly unreasonable:
1) Restrict/eliminate the duty of loyalty;
2) Set forth activities that do not violate the duty of
loyalty;
3) Alter the duty of care (but it cannot authorize
intentional misconduct or a knowing violation of
law);
4) Alter/eliminate any other fiduciary duty; and
6
03
CORPORATIONS & LLC’S
5) Set forth standards to measure the duty of good
faith & fair dealing.
L
L. Shareholder & Member Litigation
H
Direct & Derivative Actions
Direct Action – May be brought when there is a breach
of a duty owed to a shareholder of a corp. The injury
CANNOT be solely the result of an injury suffered by the
corp.
− Similarly, a member of an LLC may bring an
action against a member, manager, or the LLC
(same standard for showing of injury).
*Damages awarded will go to the SH or Member.
Fraudulent Scheme or Device includes:
a) Misrepresentation of material fact;
b) Insider trading; OR
c) Tipping – trading on material info received from
an insider.
Derivative Action – When a SH is suing to enforce the
corp.’s claim.
The RMBCA requires the SH to:
1) Own the corp.’s stock at the time the claim arose
(or became a SH by operation of law from such
a SH);
2) Be a SH through entry of judgment;
3) Fairly and adequately represent the corp.’s
interests; AND
4) Make a written demand to the corp. to take
suitable action.
In a Rule 10b-5 action, the plaintiff MUST be either:
a) the Securities & Exchange Commission (SEC);
OR
b) connected to the purchase or sale of the
securities at issue.
M. Fundamental Corporate Changes
M
A derivative suit CANNOT be commenced until 90-days
after the demand, UNLESS the corp.:
a) rejects the demand; OR
b) will suffer irreparable harm if forced to wait.
For an LLC, all of the elements are the same, except:
1) The action may be brought within a reasonable
time after the demand; and
2) The demand requirement may be waived if
futile.
Damage Award → is paid directly to the Corp./LLC, but
the SH/Member may recover reasonable costs of the
litigation.
L
Dismissal of Derivative Action by the BoD
A derivative action MUST be dismissed (on a motion by
the corp.) if:
1) A majority of the BoD’s qualified directors,
2) Have determined in good faith,
3) After conducting a reasonable inquiry, AND
4) That the action is not in the best interests of the
corp.
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Federal Securities Law – Rule 10b-5
In order to prevail on a Rule 10b-5 claim, Plaintiff must
show that:
1) D engaged in a fraudulent scheme or device,
2) which was relied upon by P,
3) in connection with the purchase/sale of
securities,
4) D acted with scienter,
5) D used some means of interstate commerce,
AND
6) P suffered damages.
Amending the Articles of Incorporation – May be
amended at any time by the following process:
1) Adoption by the BoD;
2) Notice to all SH’s of a meeting to vote on the
amendment; AND
3) Adoption by the SH’s by a majority vote – unless
a greater number is required under state law or
the Articles of Incorp.
Exception #1 → The BoD has the authority to make
general minor amendments without SH approval.
Exception #2 → BoD or Incorporators may adopt any
amendment if the corp. has not issued shares yet.
L
Mergers & Share Exchanges
Merger – The BoD of both Corporations must first
approve, then the SH’s of both must approve with a
majority vote.
But, SH approval of a corp. is NOT required if:
1) Articles of Incorporation will not be changed;
2) Outstanding shares will not change; AND
3) Voting power of any shares issued as a result of
the merger is 20% or less of the surviving corp.
7
03
CORPORATIONS & LLC’S
Short Form Merger – Occurs when a parent corp.
merges with its subsidiary, and the parent corp. owns at
least 90% of the subsidiary’s outstanding shares.
− In such a case, only the BoD of the parent corp.
has to approve the merger.
N. Dissolution & Dissociation
L
Share Exchange – The BoD of both Corporations must
first approve, then the SH’s of the acquired corp. must
approve with a majority vote.
− SH Approval of the acquiring corp. is NOT
required.
M
Sale of All / Substantially All of the Corp.’s Assets –
deemed a fundamental change if the sale is NOT in the
usual and regular course of business.
Fundamental Changes – require the following:
1) Adoption by the BoD;
2) Notice to all SH’s – must state purpose of the
meeting; AND
3) Adoption by the SH’s by a majority vote – unless
a greater number is required under state law or
the Articles of Incorp.
Election to Purchase Shares in Lieu of Dissolution –
The Corp. (or its shareholders) may elect to purchase all
shares owned by the SH petitioning for dissolution at fair
market value.
− This election is generally irrevocable.
M
A majority vote of SH’s is not required if the sale is in the
usual and regular course of business.
M
Dissenter’s Appraisal Rights – A dissenting SH is
entitled to appraisal rights (to obtain payment for the fair
market value of his shares) for any of the following
fundamental changes:
1) SH has the right to vote on the merger plan.
2) SH of the subsidiary in a short form merger.
3) SH’s shares are being acquired in a share
exchange.
4) SH has the right to vote on the distribution of all
or substantially all assets.
5) If an amendment of the Articles of Incorporation
materially and adversely affects the SH’s rights.
Procedure to Enforce Appraisal Rights – SH may
force the corp. to purchase his shares if:
1) he gives notice to the corp. of his intent to assert
appraisal rights;
2) notice was given before the vote;
3) the fundamental change is effectuated; AND
4) the SH did not vote in favor of the change.
Judicial Dissolution of a Corp. – A shareholder may
petition the court to dissolve the corp. if:
a) Deadlock of the directors and irreparable injury
to the corp.;
b) Directors acted in a manner that is illegal,
oppressive, or fraudulent (violating SH’s
reasonable expectation or preventing minority
SH’s from having equal rights/opportunities);
c) SH’s are deadlocked in voting power and have
failed to elect Directors for at least 2 consecutive
annual meetings; OR
d) Corp. assets have been wasted or misapplied.
Voluntary Dissolution of a Corp. – A corp. will be
voluntarily dissolved if:
1) The BoD adopts a proposal to dissolve;
2) Notice to all SH’s – must state the purpose of
the meeting; AND
3) Adoption by the SH’s by a majority vote – unless
a greater number is required under state law or
the Articles of Incorp.
Early Dissolution – A corp. may also be dissolved by a
majority of the incorporators or initial directors if:
1) Corp. has not issued shares or commenced
business; AND
2) Articles of Dissolution are filed with the
Secretary of State.
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Dissociation of a Member from an LLC – A member
has a right to dissociate (rightfully or wrongfully) at any
time, and occurs when the LLC has notice of the
person’s express will to withdraw.
− A dissociating member loses the right to
participate in management of the LLC, BUT he
still has the right to receive distributions.
− RULLCA → dissociation DOES NOT result in
dissolution of the LLC.
*Appraisal rights are NOT available to SH’s of
publicly traded companies.
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CORPORATIONS & LLC’S
Dissolution of an LLC
Dissolution Events (under RULLCA) – An LLC is
dissolved upon:
a) Occurrence of a dissolution event in the
Operating Agreement;
b) Consent of all members;
c) The passage of 90 consecutive days where the
LLC has no members; OR
d) Judicial dissolution.
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Purchased by Swatanter Polce, Swatanter.polce@icloud.com #14310294
Judicial Dissolution – A court may grant this upon a
showing of any of the following grounds:
a) Managers or controlling members acted in an
illegal/fraudulent manner;
b) Managers or controlling members acted in an
oppressive and directly harmful manner to the
member;
c) The conduct of all (or substantially all) of the
LLC’s activities is unlawful; OR
d) It’s not reasonably practicable to carry on the
business.
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A.
Limits on Class Action Diversity Jurisdiction:
− Court MAY decline to exercise jurisdiction when
non-diverse members are greater than 1/3
and less than 2/3 of the total class.
− Court MUST decline to exercise jurisdiction
when non-diverse members are greater than
2/3 of the total class.
Federal Subject Matter Jurisdiction (SMJ)
Three Types of Subject Matter Jurisdiction:
1) Federal Question
2) Diversity of Citizenship
3) Supplemental Jurisdiction
*A federal court may only hear cases when it has SMJ
because it’s a court of limited jurisdiction.
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Federal Question Jurisdiction – Exists when the claim
arises under (a) federal law, (b) the U.S. Constitution,
OR (c) U.S. treaty.
− P must be enforcing a federal right.
− Federal question MUST be present on the face
of a well pled complaint.
− Raising a defense under federal law is NOT
sufficient.
Diversity of Citizenship Jurisdiction
Requires BOTH:
1) Complete diversity of citizenship at the time
the action is commenced (No P can be from the
same state as any D); AND
Citizenship is determined by domicile:
− Natural Person: (1) residence, and (2)
subjective intent to make the state their
permanent home.
− Corporation: Has dual citizenship →
the principal place of business + any
state where it is incorporated.
− Unincorporated Association: Deemed
to be a domiciliary of the state of every
partner/member/owner.
− Executor/Personal Representative:
Citizenship is that of the decedent or
person being represented.
2) Amount in controversy exceeds $75,000.
Based on damages alleged in good faith in
the Complaint, UNLESS it’s legally certain
that the P cannot recover the specified
amount.
− Injunctive Relief = the amount of the
benefit to P or cost of compliance for D.
− May aggregate claims against one D
(or against multiple Ds if they are jointly
and severally liable).
Diversity Jurisdiction of a Large Class Action –
exists when:
1) Amount in controversy exceeds $5 million;
AND
2) Minimal diversity is present – if any member of
the plaintiff class is a citizen of a State different
from any defendant.
*The class MUST have at least 100 members.
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Class Action Jurisdiction DOES NOT apply:
a) If the primary D’s are States, State officials, or
other govt. entities that the court is foreclosed
from ordering relief;
b) If less than 100 class members; OR
c) In class actions involving securities or corporate
fiduciary claims.
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Supplemental Jurisdiction – Allows a party to bring a
state claim in Federal Court that does not meet the
requirement of SMJ.
− A Federal Court may exercise Supplemental
Jurisdiction when such claim arises from a
common nucleus of operative fact as the
other claims the court has SMJ over (the claims
must arise out of the same transaction or
occurrence).
Limitations of Supplemental Jurisdiction:
− Supp. Jurisdiction CANNOT be used to
overcome a lack of diversity.
− It CANNOT be asserted if it would violate
complete diversity.
A court MAY decline to exercise Supp. Jurisdiction
when:
a) a claim raises a novel or complex issue of State
law;
b) a claim substantially predominates over the
other claims which the court has SMJ;
c) the court dismissed all claims that had federal
SMJ; OR
d) in exceptional circumstances.
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Domestic Relations Exception – Federal courts MUST
decline jurisdiction if a case primarily involves
domestic relations matters (divorce, alimony, child
custody/support issues).
− But, a court should NOT decline jurisdiction
when a domestic relations matter/issue is
ancillary to the case.
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CIVIL PROCEDURE
Removal – Defendant MAY remove a case to Fed.
Court (in the district where the state court case was
originally filed) if:
1) The federal court has SMJ;
2) All defendants agree;
3) No defendant is a resident of the forum state;
AND
4) Removal is sought within 30-days of service of
the Summons or receiving the initial pleading
(whichever is shorter).
Long Arm Jurisdiction – To assert PJ over a nonresident:
1) The State must have a Long-Arm Statute; AND
2) Comply with Constitutional Due Process
Requirements – D has sufficient minimum
contacts with the forum state so as not to offend
traditional notions of fair play and substantial
justice.
i) Prong 1 - Minimum Contacts (contacts +
relatedness) – Either:
a) General Jurisdiction – contacts so
substantial and of such nature that D
is essentially at home; OR
i. Individuals = domicile in state
ii. Corporations = where Corp. is
“at home” (usually where
incorporated or
headquartered).
b) Specific Jurisdiction – connection
between forum state and underlying
controversy AND lawsuit must
relate/arise from D’s contact with the
state.
i. Regularly occurring product
sales in a state DOES NOT
justify jurisdiction of a claim
unrelated to those sales.
ii) Prong 2 - Fair Play & Substantial Justice
(fairness) – Must be fair and reasonable for
D to be sued in the forum state.
A plaintiff CANNOT remove a case to Fed. Court.
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Abstention Doctrines – Federal courts MAY abstain
from hearing a case when it would intrude upon the
powers of another court. Additionally, a court may stay a
case arising from ambiguous state law to await the
outcome of a pending state court case.
Abstention Doctrines:
− Pullman Doctrine – discretion to abstain when
a case arises from unsettled areas of state law,
and a state court interpretation may remove the
need to decide the case on federal grounds.
− Younger Doctrine – court may abstain from
hearing constitutional challenges to a state
action when it would interfere with a state
judicial proceeding.
− Colorado River Doctrine – court should abstain
when parallel (substantially the same) state and
federal litigations are pending.
− Burford Doctrine – abstaining is appropriate if
federal adjudication would interfere with a state’s
administration of a complex regulatory scheme.
B.
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Personal Jurisdiction (PJ)
Personal Jurisdiction Requirements – Fed. Courts
must have PJ over a party for its judgment to be binding.
− Fed. Courts can exercise PJ to the same extent
as the State courts where the federal district
court is located.
Personal Jurisdiction falls into 2 categories:
1) Traditional bases of jurisdiction; and
2) Long-arm Jurisdiction.
Traditional Bases of Jurisdiction:
a) Domicile;
b) Presence in the state when served;
c) Consent; OR
d) Waiver (appearing in the action without
objecting).
*The above comports with Due Process requirements.
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C.
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Service of Process & Notice
Service of Process & Notice
Timing – Summons & Complaint MUST be served on D
within 90-days after filed with the court.
− Otherwise, the court must → (a) dismiss the
action without prejudice against that D; OR (b)
order that service be made within a specified
period of time.
Process Server – Service may be made by any person
who is: (1) at least 18 years old, AND (2) not a party to
the action.
Method of Service – The method of service must be
consistent with Due Process → reasonably calculated, to
make the parties aware of the action, and give them an
opportunity to object.
− Individual → may be served: (a) personally; (b)
via someone of suitable age and discretion at
the individual’s current dwelling or usual place of
abode; (c) via an agent (by appointment or by
law); OR (d) in accordance with state law of the
forum state or where service is made.
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−
−
Corporation, Partnership, or Association → may
be served: (a) in accordance with state law of
the forum state or where service is made; OR
(b) to an officer or managing/general/authorized
agent.
Foreign Defendant → may be served via any
manner NOT prohibited by international
agreement.
D.
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Substance vs. Procedure:
Procedural Law = civil procedure rules, statute of
limitations (except in limited circumstances), burden of
proof, and rebuttable presumptions.
Substantive Law = choice of law rules, statute of frauds,
irrebuttable presumptions, statute of limitations that
condition a substantive right or have a borrowing statute.
When Substantive Federal Law Applies – Federal law
will apply for matters governed by the U.S. Constitution,
laws passed by Congress, and valid federal law that
preempts state law under the Supremacy Clause.
Venue
Proper Venue & Transfer of Venue
Proper Venue – Venue is Proper in any district where:
a) any defendant resides (if all defendants are
residents of the forum state);
b) a substantial portion of the claim occurred;
c) a substantial portion of the property is located;
OR
d) if none of the above, then where any defendant
is subject to the court’s PJ.
*Proper venue is determined at the time the action was
filed.
F.
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Forum Selection Clause – Courts will enforce a forumselection clause UNLESS special factors are present
(i.e. significant/unusual hardship, inequality of bargaining
power).
E.
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Law Applied by Federal Courts
State Law in Federal Court
Erie Doctrine – Applies when a federal case is brought
under diversity of citizenship jurisdiction.
− Federal courts will apply federal procedural
law, BUT must apply the substantive law of
the forum state in which it sits.
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Preliminary Injunction – Maintains the status quo
pending the outcome of an action.
May be issued only:
1) upon notice to the adverse party; AND
2) if the moving party gives security/bond (used
to reimburse non-movant for injury caused by
the injunction if the moving party is not
successful on the merits).
Transfer of Venue:
If venue was proper when the case was filed, the court
MAY transfer it if:
1) Needed for the convenience of the witnesses or
in the interests of justice; AND
2) The case could have initially been brought in the
receiving court (court has PJ and SMJ).
If venue was improper when the case was filed, the court
MUST either:
a) Dismiss the case; OR
b) Transfer the case to a proper court if the
interests of justice require it.
Preliminary Injunctions & TRO’s
Traditional 4 -Prong Test requires:
1) Likelihood of P’s success on the merits;
2) Likely threat of irreparable harm to the movant;
3) The harm alleged by movant outweighs any
harm to the non-moving party (balancing the
harm); AND
4) An injunction is in the public interest.
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Temporary Restraining Order (TRO) – Is an
emergency remedy used to maintain the status quo
pending the outcome of a preliminary injunction
application.
− To be issued, a movant must allege immediate
and irreparable harm, and a court will analyze
the same factors as a preliminary injunction.
Ex Parte TRO – Moving party MUST:
1) provide specific facts in a sworn statement
showing immediate and irreparable injury, injury,
loss, or that damage will result before an
adverse party can be heard;
2) certify in writing any efforts made to give notice
to the adverse party and why notice should not
be required; AND
3) give security in an amount that the court deems
proper.
*The United States, its officers, & its agencies are NOT
required to give security.
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If granted, an ex parte TRO automatically expires after
14 days, UNLESS: (a) the court sets a shorter timeframe for automatic expiration; (b) the court extends it for
good cause; or (c) the parties consent.
− The adverse party may move to dissolve or
modify the TRO on 2-days’ notice.
G.
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Compulsory Counterclaim = a claim that: (1) arises out
of the same transaction or occurrence; AND (2) does not
require adding another party out of the court’s
jurisdiction.
− MUST be stated in party’s pleading or it’s
deemed waived.
Same Transaction or Occurrence Factors – Courts
analyze whether:
1) Issues of fact and law are largely the same;
2) Res judicata would bar a subsequent suit;
3) Substantially the same evidence supports or
refutes the claims; and
4) If there is any logical relation between the claim
and counterclaim.
*The presence of any factor above supports that the
claim arises out of the same transaction or occurrence.
Pleadings
Amendments to Pleadings
As of Right – allowed to amend once as a right within
21-days after service of:
a) the original pleading; OR
b) a responsive pleading or pre-answer motion to
the original pleading.
By Permission – in all other cases, an amendment is
allowed:
a) with the opposing party’s written consent; OR
b) with leave of the court upon motion (should be
freely granted when justice so requires).
Adding Affirmative Defenses – A party must set forth
ALL affirmative defenses to the claim alleged.
− If a party fails to do so, the pleading MUST be
amended.
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H.
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Waived Defenses – If the following defenses are NOT
included in the D’s first response (answer/ pre-answer
motion), they are deemed waived: (1) lack of PJ; (2)
improper venue; (3) insufficient process; and (4)
insufficient service of process.
− BUT, courts have allowed adding waivable
defenses to a MTD when: (1) promptly made;
AND (2) it’s prior to a hearing on the original
motion.
Relation Back Doctrine – When a Complaint is
amended to add a:
New Claim → relates back to the date of the original
filing so long as it arises out of the same transaction or
occurrence as the original pleading allegations.
New Defendant → relates back so long as:
1) same transaction and occurrence;
2) new party received notice of the original action
within 90 days of filing; AND
3) new party knew (or should have known) that the
action would have been brought against it but for
a mistake in the party’s identity.
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Counterclaims – a claim against an opposing party.
Permissive Counterclaim = counterclaims that are not
compulsory.
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Cross-Claims – A pleading may state a claim against
co-party (co-defendant) as a cross-claim, BUT only if it
arises out of the same transaction or occurrence as the
original action or counterclaim.
Rule 11
Rule 11 – Representations to the Court
All papers served in a litigation MUST be signed by an
attorney of record (or by the party if unrepresented).
When presenting the papers to the court, the party
certifies the following:
1) It is not being presented for any improper
purpose;
2) The legal contentions are warranted and nonfrivolous;
3) The factual contentions have evidentiary support
or likely will after discovery; AND
4) denials of factual contentions are warranted or
reasonably based on lack of information.
*NOTE: Rule 11 does not apply to discovery or
discovery motions.
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Rule 11 – Sanctions Imposed – The court may issue
sanctions (by motion or on its own) for failure to comply
with Rule 11.
Nature of Sanctions Imposed – are within the
discretion of the court, and can be:
a) non-monetary directives;
b) pay a penalty; or
c) pay reasonable attorney’s fees/expenses
resulting from the violation.
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Liability for Sanctions:
− Generally, a law firm is jointly responsible for a
violation by its partner, associate, or employee.
− Monetary sanctions CANNOT be issued against
a client for an unwarranted claim/defense/legal
contention made by their attorney.
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Procedure for Filing a Rule 11 Sanctions Motion
A party CANNOT file a Rule 11 motion with the court
without first:
1) serving the motion on the offending party;
AND
2) giving the opponent 21 days to withdraw or
correct the paper/pleading.
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If joinder is NOT feasible, the court will consider factors
to decide whether to continue or dismiss the action:
▪ whether the party’s absence might prejudice any
other party;
▪ whether prejudice can be lessened or avoided;
▪ whether an adequate judgment can be
rendered; and
▪ if plaintiff would have an adequate remedy if the
case is dismissed.
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Intervention as of Right – A court MUST permit a nonparty to intervene in an action if it demonstrates:
1) That the application to intervene is timely;
2) An interest in the subject matter of the action;
3) That protection of this interest would be
impaired; AND
4) Such interest is not adequately represented by
existing parties in the action.
Joinder of Parties & Claims
Permissive Joinder of Parties – Multiple plaintiffs or
defendants MAY be joined in one action if:
1) joint and several relief is asserted by them or the
claim arises out of same transaction or
occurrence;
2) a common question of law or fact exists; AND
3) SMJ is present for each claim.
If Intervention as of Right is NOT present, the court may
still allow Permissive Intervention upon a timely motion.
Permissive Intervention – A court MAY allow a nonparty to intervene when the non-party:
1) Files a timely motion; AND
2) Either:
a) Has a claim/defense that shares a
common question of law or fact with the
main action; OR
b) Is given a conditional right to intervene
by federal statute.
*The court must consider whether intervention will
unduly delay or prejudice the adjudication of the original
parties’ rights.
Logical Relationship Test → all logically related events
for a legal action are within the meaning of same
transaction or occurrence.
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Required Joinder of Parties – A party MUST be joined
if:
1) The party is necessary; AND
2) Joinder is feasible.
*The court must order that such a party be joined in the
action.
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Necessary Party – a party is necessary if:
a) The court cannot grant complete relief without
the party;
b) The absent party claims an interest in the action
that would be impaired or impeded; OR
c) The party’s absence creates a substantial risk of
multiple liability or inconsistent obligations.
Feasibility – joinder is feasible if:
1) Joinder will not remove SMJ; AND
2) Court has PJ over the party.
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Intervention in an Action
Impleader (Third-Party Actions) – D may bring a thirdparty into an action only if:
1) The third-party is/may be liable to D,
2) for all/part of the judgment in the action.
*Claims merely arising out of the same transaction or
occurrence are insufficient unless derivative liability
exists (i.e. indemnification, contribution).
Commencement of a Third-Party Action – Defendant
(as a third-party plaintiff) must serve a Summons &
Third-Party Complaint upon the third-party.
− Leave of the court is required if more than 14days have passed since serving its Answer.
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CIVIL PROCEDURE
Class Actions
Requirements: A person is allowed to sue on behalf of
a class when there is:
1) Numerosity – class is so numerus that joinder
is impracticable;
2) Commonality – questions of law or fact are
common to the class;
3) Typicality – the claims/defenses of
representative parties are typical of the class;
AND
4) Adequacy of Representation – the
representative parties (incl. counsel) will fairly
and adequately protect the interests of the class.
Class Certification: If the above are met, the class will
be certified if:
a) Separate actions would (i) create a risk of
inconsistent adjudications or (ii) harm the
interests of other class members;
b) The party opposing the class has acted/refused
to act on grounds that apply generally to the
class and the grounds for relief are appropriate;
OR
c) Common questions of law or fact are
predominant, and a class action is superior to
other methods.
J.
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Sanctions for Failure to Preserve ESI – The court may
sanction a party for failure to preserve ESI only if:
1) The ESI should have been preserved;
2) The party failed to take reasonable steps to
preserve it; AND
3) The ESI cannot be replaced/restored through
additional discovery.
If the above test is satisfied, the court may:
a) Order measures to cure any prejudice; OR
b) If failure to preserve was intentional:
i. presume that the lost info was unfavorable;
ii. instruct the jury that it may or must
presume that the lost info was unfavorable;
iii. dismiss the action; or
iv. enter a default judgment.
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Discovery
Depositions – A party is permitted up to 10 depositions
of any person/party, so long as the deposition is:
1) Is limited to 1 day of no more than 7 hours; AND
2) Proper notice is given (reasonable written
notice).
*A subpoena is NOT required to depose a party to the
action.
Unless stipulated otherwise, a party MUST obtain leave
of the court:
a) To take more than 10 depositions;
b) To depose a party again – if they had already
been deposed in the action; OR
c) If it’s seeking a deposition prior to the Rule 26(f)
meet and confer conference.
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Rule 26(g) – Discovery Disclosures & Sanctions – All
discovery papers served in a litigation MUST be signed
by an attorney of record (or a party personally if
unrepresented).
Certifications When Signing:
− Signing any disclosure → certifies that it’s
complete and correct at the time made.
− Signing any other discovery document →
certifies that it’s: (1) consistent with the FRCP
and is not frivolous; (2) not being presented for
an improper purpose; AND (3) not
unreasonable, unduly burdensome, or unduly
expensive.
Discoverable Information – A party may obtain all nonprivileged info that is:
1) Relevant to any party’s claim or defense; AND
2) Proportional to the needs of the case.
*The info need not be admissible into evidence to be
discoverable.
Once a person reasonably anticipates litigation, that
person has a duty to preserve ALL relevant evidence.
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Electronically Stored Info (ESI) – Includes emails, text
messages, digital files, and meta-data. When a party
reasonably anticipates litigation, it must suspend its
routine document retention/destruction policies to
preserve ESI.
Sanctions – The court may issue sanctions for failure to
comply with Rule 26(g). If a person violates the rule
without substantial justification, the court MUST impose
an appropriate sanction (i.e. pay reasonable expenses,
incl. attorney’s fees, caused by the violation).
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Rule 26(a) – Initial Disclosures – Without request,
each party MUST provide these initial disclosures to
opposing parties within 14-days after the Rule 26(f)
“meet and confer” conference:
1) Contact info of individuals likely to have
discoverable info, plus the info they likely
possess;
2) Copy or description of all documents, ESI, &
tangible things the party may use to support its
claims/defenses (unless it will be used solely
for impeachment);
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3) Computation of each category of damages;
AND
4) Any insurance agreement that may be liable to
satisfy a judgment in the action.
*If a party fails to provide the above, that party is NOT
allowed to use that witness/info on a motion, hearing, or
trial UNLESS the failure was substantially justified or
harmless.
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Attorney Work Product Doctrine – Protects from
disclosure all materials prepared by an attorney (or his
agents) in anticipation of or during litigation UNLESS:
1) A substantial need for the materials exists; AND
2) A substantial equivalent cannot be obtained
without undue hardship.
Privilege Log – When a party claims protection, it must
disclose the existence of the material in sufficient detail
to enable other parties to asses the claim of privilege.
K.
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Motion to Dismiss Grounds:
1) Lack of SMJ;
2) Lack of PJ;
3) Improper venue;
4) Insufficient process;
5) Insufficient service of process;
6) Failure to state a claim upon which relief can be
granted;
7) Failure to join a necessary party.
*Grounds (2) through (5) are deemed waived if not
raised in the first responsive pleading or pre-answer
motion to dismiss.
*Ground (1) may be made at any time.
Motion for Judgment on the Pleadings – After
Defendant answers, a motion on the above grounds is
called a “Motion for Judgment on the Pleadings”.
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Summary Judgment (SJ) Motion – A court will grant
an SJ motion when:
1) There is no genuine issue of material fact;
AND
2) Movant is entitled to judgment as a matter of
law.
*The court MUST view the evidence in the light most
favorable to the non-moving party.
− An SJ motion may be sought on the entire case
or for certain issues (partial summary judgment).
− If a Motion to Dismiss (or Motion for Judgment
on the Pleadings) presents matters outside the
pleadings, the court may treat the motion as a
SJ Motion.
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Motion for Judgment as a Matter of Law (JMOL) –
May be brought at any time before the case is submitted
to the jury.
Pretrial Conference & Order
Pretrial Conference – The court may order the
attorneys (and pro-se parties) to appear for a Pre-trial
Conference to control the management/scheduling of the
case.
− Attendance is MANDATORY.
Scheduling Order – The court will issue a Scheduling
Order in most types of actions.
− The Scheduling Order may be modified only:
(1) for good cause; AND (2) with the judge’s
consent.
Pretrial Conference Sanctions – May be issued if a
party: (a) fails to appear; (b) is substantially unprepared;
(c) does not participate in good faith; OR (d) fails to obey
a scheduling/pretrial order.
− Sanctions include → (a) prohibiting a party from
supporting/opposing certain claims or defenses;
(b) striking all/part of the pleading; (c) dismissing
all/part of the action; OR (d) a default judgment.
Modification of Pretrial Conference Order – can only
be modified by the court to prevent manifest injustice.
L.
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Motions
Motion to Dismiss / Judgment on the Pleadings
Motion to Dismiss Standard – Requires the court to:
(1) consider the facts in the light most favorable to the
non-moving party; and (2) determine if there is any basis
upon which relief can be granted.
− The court DOES NOT evaluate the merits of the
case.
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JMOL will be granted if:
1) The non-moving party has been fully heard on
the issue during a jury trial; AND
2) The court finds that a reasonable jury would not
have a legally sufficient basis to rule in favor of
the non-moving party on that issue.
*The court MUST draw all reasonable inferences in the
light most favorable to the opposing party.
Renewal of JMOL Motion – A party may renew its
JMOL motion only if it moved before the case was
submitted to the jury.
− A renewed JMOL motion must be filed within 28
days of the entry of judgment.
7
04
L
CIVIL PROCEDURE
Motion for a New Trial – Court may grant a new trial for
any reason for which a new trial has been granted in
federal court.
− Must be filed no later than 28 days after the
entry of judgment.
Elements – Issue Preclusion may be invoked when:
1) Valid and final judgment was rendered in the
first action;
2) Issue is identical to the issue decided in the prior
action;
3) Issue was actually litigated, determined, and
essential in the prior action; AND
4) Party against whom enforcement is sought had
a full and fair opportunity to litigate the issue in
the prior action.
*Generally, a non-party to a prior action MAY assert
issue preclusion.
Grounds for a New Trial:
a) Error at trial that makes judgement unfair;
b) New evidence surfaced that could not be
obtained with due diligence for the original trial;
c) Prejudicial misconduct of a party, attorney, thirdparty, or juror;
d) Judgment was against the weight of evidence;
OR
e) Verdict was excessive or inadequate.
P.
H
M.
L
Default Judgment – A default judgment will have a
preclusive effect if the court had jurisdiction (SMJ + PJ).
− States vary as to effect of preclusion a default
judgment is given, BUT:
▪ A state court MUST give a judgment in a
federal diversity action the same effect it
would give a state court judgment.
▪ A default judgment bars a party from
asserting compulsory counterclaims that
could have been raised in the original
action.
O.
M
Verdicts and Judgments
Claim Preclusion & Issue Preclusion
Claim Preclusion (Res Judicata) – precludes a party
from subsequently re-litigating any claim that was or
could have been raised.
Elements – Claim Preclusion may be invoked when:
1) Parties are identical or in privity;
2) Prior judgment was rendered by a court of
competent jurisdiction;
3) Final Judgment on the merits in the prior action;
AND
4) Same claim was involved in both actions (claim
arises out of the same transaction or
occurrence).
Privity – exists when the non-party has a legally
recognized relationship with the original party and would
be bound by a judgment against the original party.
M
Issue Preclusion (Collateral Estoppel) – precludes a
party from attempting to retry an issue if there has been
a final judgment on the merits by a court of competent
jurisdiction.
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Appeals
Final Judgment Rule & Exceptions
Final Judgment Rule – A federal appellate court can
only hear an appeal from a final judgment on the
merits (unless an exception applies).
Final Judgment / Decision is one which:
1) Ends the litigation on the merits (ALL claims are
resolved); AND
2) Leaves nothing for the court to do but execute
the judgment.
Filing – an appeal MUST be filed within 30 days after
entry of the judgment.
EXCEPTIONS to Final Judgment Rule:
1) Rule 54(b) Exception
2) Statutory Exceptions
3) Certified Appeal Exception
4) Collateral Order Doctrine
5) Writs of Mandamus & Prohibition
6) Pendent Appellate Jurisdiction
7) Certification of Class Action
Rule 54(b) Exception – an immediate appeal is allowed
when:
1) Action has multiple parties or multiple claims;
2) Court directs final judgment for some of the
claims or parties; AND
3) Court expressly determines that there is no just
reason for delay of an appeal.
Statutory Exceptions – can immediately appeal orders
for: (i) injunctions, (ii) receiverships, (iii) possession of
property, (iv) liability in an admiralty action, and (v)
patent infringement orders that are final except for an
accounting.
8
04
CIVIL PROCEDURE
Certified Appeal Exception – an immediate appeal is
allowed when:
1) A federal district court judge certifies certain
grounds for immediate appeal; AND
2) The Court of Appeals agrees to permit the
appeal.
*Application for the appeal must made within 10 days
after entry of the order.
Collateral Order Doctrine – allows an immediate
appeal if the interlocutory order:
1) Conclusively determines the disputed question;
2) Resolves an important issue that is separate
from the merits of the action; AND
3) Is effectively unreviewable on appeal from a final
judgment.
Pendant Appellate Jurisdiction – A party may seek to
have a non-final order reviewed along with another
appealable order currently pending before the appellate
court when:
a) A non-appealable decision is inextricably
intertwined with an appealable decision; OR
b) Review of the non-appealable order is
necessary to ensure a meaningful review of
the appealable order.
Certification of Class Action – an order
granting/denying class-action certification may be
appealed when:
1) A petition for permission to appeal is filed within
14 days after entry of the order; AND
2) The Court of Appeals agrees to hear the appeal.
Writs of Mandamus & Prohibition – allows an
immediate appeal if there is an abuse of authority by a
trial court.
− Issued only in exception circumstances.
− Cannot be used to correct an ordinary error.
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9
05
CONFLICT OF LAWS
A.
MEE Tip: The essay question will likely instruct you on
which approach to apply or analyze.
− If no guidance is given, then analyze all three
choice of theories in conjunction with the specific
rules for the type of action/issue (i.e. tort,
contract, real property, forum selection clause).
M
Traditional Vested Rights Approach
Under this approach, apply the law of the state where
transaction or event occurred.
− Examples → place of wrong/injury, where
contract was formed/performed, location of real
property.
H
Most Significant Relationship Approach (Rest. 2nd)
Under this approach, apply the law of the state having
the most significant relationship to the transaction
and the parties.
H
Interest Analysis Approach
Under this approach, the court weighs the interests of
the states involved.
− The state with the greater interest will have its
law applied.
3-Step Process to Determine the Greater Interest:
1) If one state has an interest to apply its policy,
and the other state doesn’t, the court should
apply the law of the interested state.
2) If there is an apparent conflict between the
interests of two states, the court should look for
a more moderate/restrained interpretation to
avoid the conflict.
3) If there is still a conflict, the law of the forum
state applies.
*This approach DOES NOT change depending on the
type of action involved.
B.
L
Interest Analysis Approach → apply the law of the
state with the greater interest.
Choice of Law Theories
Application in Specific Areas
Torts
Traditional Vested Rights Approach → apply the state
law where the wrong or injury occurred.
Most Significant Relationship Approach → apply the
law of the state that has the most significant relationship
to occurrence and the parties.
− A court must consider → (i) where the injury
occurred, (ii) where the conduct causing the
injury occurred, (iii) domicile/residence of the
parties, and (iv) where the relationship of the
parties is centered.
*If unclear → apply local law.
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H
Contracts
Contracts with a Choice of Law Provision:
− Contract Construction → the parties are free to
choose for matters of contract construction.
− Contract Validity → the parties may choose the
applicable law ONLY IF: (1) the state has some
connection; (2) the contract was not entered
into under fraud, duress, or mistake; AND (3)
the choice of law isn’t contrary to a substantial
policy interest of another state that has more of
a significant interest.
No Valid Choice of Law Provision:
− Traditional Vested Rights Approach → apply
the law of the state where contract was formed
or is to be performed.
− Most Significant Relationship Approach →
apply the law of the state that has the most
significant relationship.
o Factors – court must consider the place
of contracting, place of negotiation &
performance, location of the subject
matter of the contract, and the parties’
domicile, residence, nationality, and
place of business.
− Interest Analysis Approach → apply the law of
the state with the greater interest.
M
Contractual Forum-Selection Clause
Courts will enforce a contractual forum-selection clause
to transfer venue of an action UNLESS special factors
are present (i.e. significant/unusual hardships or
inequality of bargaining power).
L
Premarital Agreements
To determine enforceability, apply the law:
a) Where the agreement was executed; OR
b) That has the most significant relationship to
transaction and the parties.
*Most states apply the Most Significant Relationship
Approach, where courts will analyze where:
i) agreement was signed;
ii) parties were married;
iii) parties lived while married;
iv) parties are currently living;
v) assets are located; and
vi) any children were born.
1
05
L
H
CONFLICT OF LAWS
Real Property
Apply the state law where the real property at issue is
located (the situs rule) for cases involving the title/sale
of real property.
− Rest. 2nd Approach → it’s presumed that the
situs state has the most significant relationship.
− If the land is merely incidental to a contract (i.e.
brokerage contract, mortgage agreement), then
apply the choice of law rules for contracts.
L
Full Faith & Credit – State, Federal, & Foreign Court
Judgments
State Courts:
− Required to give full faith and credit to judicial
proceedings of every U.S. state, territory, or
possession (i.e. Puerto Rico, U.S. Virgin
Islands).
− Required to give a federal judgment the same
force and effect as it would be given under the
preclusion rules of the state where the rendering
federal court sits.
Law Applied by Federal & State Courts
Federal Courts:
− Required to give state court judgments the same
preclusive effect as a state court is required to
give another state court judgment.
Law Applied by Federal Courts
Erie Doctrine – Applies when a federal case is brought
under diversity of citizenship jurisdiction. Federal courts
will apply:
− Federal procedural law, and
− Substantive law of the forum state in which it
sits.
Doctrine of Comity – A court MAY (but is not required
to) give full faith and credit to judgments from foreign
countries.
H
Full Faith & Credit – Ceremonial & Common Law
Marriage – The validity of a marriage is determined by
the law of the state with the most significant relationship
to the spouses.
− A marriage that is valid where formed is valid
everywhere, UNLESS it violates the strong
public policy of another state.
− Most states will honor a common law marriage
validly established in another state.
H
Full Faith & Credit – Family Law Judgments
Divorce → A divorce validly granted in another state is
entitled to full faith and credit in ALL other states.
− Ex Parte Divorce (where only one spouse is
before the court) → may be maintained without
personal jurisdiction over the absentee spouse
IF the plaintiff spouse is a domiciliary of the state
where the court sits.
Substance vs. Procedure:
Procedural Law = civil procedure rules, statute of
limitations (except in limited circumstances), burden of
proof, and rebuttable presumptions.
Substantive Law = choice of law rules, statute of frauds,
irrebuttable presumptions, statute of limitations that
condition a substantive right or have a borrowing statute.
When Substantive Federal Law Applies – Federal law
will apply for matters governed by the U.S. Constitution,
laws passed by Congress, and valid federal law that
preempts state law under the Supremacy Clause.
L
Recognition & Enforcement of Judgments
Full Faith & Credit – A judgment is entitled to full faith a
credit when the:
1) Rendering court had jurisdiction (PJ + SMJ);
2) Case was decided on the merits; AND
3) Judgment was final.
Inheritance
Real property → apply the state law of where the
property is located (the situs rule).
Personal Property → apply state law of decedent’s
domicile state.
− Domicile → determined by a person’s (1)
residence (physical presence in the state),
AND (2) subjective intent to make the state
their permanent home.
C.
H
D.
Law Applied by State Courts
− Procedural Issues → A state court will apply the
law of the forum state for procedural issues.
− Substantive Issues → For substantive issues,
the choice of law rules of the forum state
determines which state’s law is applied.
*See rule above for what constitutes substantive law vs.
procedural law.
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Economic or Child Custody/Support → The court
MUST have had personal jurisdiction over the
defendant-spouse in order for the judgment to be given
full faith and credit.
2
06
A.
H
CONSTITUTIONAL LAW
Ripeness – whether the case is ready to be litigated.
A case is ripe → when actual harm or an immediate
threat of harm exists.
− Court may grant pre-enforcement review of a
statute/law after considering: (1) hardship of the
parties if no review; AND (2) fitness of the
record.
Constitutional Limits on Federal Court Jurisdiction
State Sovereign Immunity (11th Amendment)
11th Amend. prohibits a party from suing a state (or
state agency) in Federal Court UNLESS:
a) State explicitly consents to waive protection;
b) Lawsuit pertains to federal laws adopted under
Section 5 of the 14th Amendment;
c) Lawsuit seeks only injunctive relief against a
state official; OR
d) Lawsuit seeks money damages from a state
official.
11th Amend. DOES NOT apply to:
a) Local governments;
b) A federal lawsuit by a state against another
state; OR
c) A lawsuit by the federal govt. against a state.
B.
Mootness – when a dispute has ended or was resolved
before review.
− Exceptions → (a) case is capable of being
repeated but escapes review; (b) voluntary
cessation, but it can resume any time; OR (c)
class actions, where at least one member has
an ongoing injury.
C.
M
Justiciability
Art. III of the U.S. Constitution limits federal courts to
hearing actual cases and controversies.
M
Standing – P must have standing to sue in court.
Exists when:
1) P personally suffered an injury in fact (concrete
and particularized injury);
2) There is causation; AND
3) The injury is redressable by court order.
M
Organization Standing – Allowed to sue on behalf of
the members if:
1) The suit is related to an issue germane to the
organization’s purpose;
2) Members would have standing to sue; AND
3) Members’ participation is not necessary.
Taxpayer Standing – P may bring a lawsuit regarding
specific amounts owed under their tax bill.
− But, a party DOES NOT have standing solely for
being a taxpayer (i.e. challenging govt.
expenditures).
M
Advisory Opinions, Ripeness, & Mootness – Courts
CANNOT give advisory opinions or address hypothetical
disputes.
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Commerce Clause – Under the commerce clause,
Congress can regulate:
1) Channels of interstate commerce (highways,
phone lines)
2) People and instrumentalities of interstate
commerce (cars, airplanes, pilots);
3) Economic/commercial activity that has a
substantial effect on interstate commerce.
Federal regulations regarding intrastate commerce will
be upheld when (1) there is a rational basis, (2) to
conclude that the cumulative impact (aggregation), (3)
has a substantial effect on interstate commerce.
− Aggregation CANNOT be used when the activity
is not commercial/economic in nature.
Injunctive/Declaratory Relief – P must show a
concrete, imminent threat of future injury.
Third-Party Standing – Generally not permitted
UNLESS:
a) A close relationship exists;
b) It’s difficult or unlikely for the third-party to assert
their rights on their own; OR
c) The third-party is an organization.
Powers of Congress
Power to Enforce the 13th, 14th, & 15th Amendments
Congress has the power to enforce:
▪ 13th Amend. – abolition of slavery.
▪ 14th Amend. – privileges and immunities, due
process, equal protection, apportionment of
representatives.
▪ 15th Amend. – right to vote cannot be denied
because of race.
Congress MAY ONLY prohibit behavior that is likely to
involve a constitutional violation. There must be
congruence and proportionality between the injury to be
prevented and the legislative means adopted.
− Congress CANNOT define Constitutional rights
or change substantive law.
M
Taxing Power – Congress has the power to lay and
collect taxes, duties, imposts, and excises.
− Duties, imposts, and excises MUST be
geographically uniform throughout the U.S.
− Under 16th Amend., Congress has the power to
collect taxes on income from any source.
1
06
M
CONSTITUTIONAL LAW
Spending Power – Congress has the power to spend
for the common defense and general welfare.
F.
H
Congress MAY attach restrictions or conditions on
States receiving federal funds, BUT must satisfy the
following:
1) Spending must be for the general welfare;
2) Condition must be imposed unambiguously;
3) Condition must be related to the federal interest
in national projects or programs;
4) Condition cannot induce unconstitutional activity;
AND
5) Condition cannot be so coercive as to turn
pressure into compulsion.
M
M
G. Federalism-Based Limits on State Authority
Powers of the President
Domestic Powers – President has the power to:
1) Execute the law;
2) Appoint ambassadors, consuls, federal judges,
and officers (with senate advice and consent);
3) Appoint inferior officers (when such power is
given by Congress);
4) Remove cabinet level appointees (without
cause);
5) Remove independent regulatory agency
appointees (without cause unless Congress
passes a law requiring good cause);
6) Pardon federal crimes; and
7) Act as Commander-in-Chief of the military
(control troops).
Discriminatory Regulations – Laws that are facially
discriminatory or have a discriminatory impact are
unconstitutional UNLESS:
a) The burden is narrowly tailored to achieve a
legitimate, non-protectionist state objective
(no less-discriminatory alternatives are
available); OR
b) The state is a market participant rather than a
regulator of economic activity.
Unduly Burdensome Regulations – Laws that are not
discriminatory, but place an undue burden on interstate
commerce are UNCONSTITUTIONAL when:
1) the burden on interstate commerce,
2) is clearly excessive to the putative benefits to
the state/local govt.
*Courts apply this balancing test on a case-by-case
basis.
President has the power to control and deploy U.S.
troops in foreign countries.
M
Federal Interbranch Relationships
Delegation of Congressional Powers – Congress may
delegate legislative powers, so long as:
1) The powers are delegable under the
Constitution; AND
2) Congress provides reasonably intelligible
standards to guide the delegation.
Non-Delegation Doctrine – Congress CANNOT
delegate powers it does not have.
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Negative Commerce Clause – A state MAY regulate
commerce so long as Congress has NOT enacted laws
on the subject matter.
− If such laws are enacted, then any state/local
law would be pre-empted by federal law.
Notwithstanding the above, States CANNOT pass laws
that:
a) Discriminate against out-of-state commerce; OR
b) Place an undue burden on interstate commerce.
Treaty & Foreign Affairs Powers – President shares
treaty powers with Congress. Treaties may be
negotiated by the President, but must be ratified by the
Senate.
− But, the President has the power to enter into
Executive Agreements (agreements between
the President and a head of a foreign country)
without Senate approval.
E.
State Immunity from Federal Law (10th Amendment)
All powers not granted to the Fed Govt. are reserved to
the States (unless prohibited by the Constitution).
Congress CANNOT compel a State Govt. to implement
legislation.
− BUT, Congress MAY induce state govt. action
by attaching restrictions and conditions on
federal funding pursuant to its spending power.
H
D.
Intergovernmental Immunities
M
Supremacy Clause & Preemption – Under the
Supremacy Clause, a validly enacted federal law will
always preempt conflicting state law.
− Express Preemption – occurs when the federal
law specifically states it is exclusive.
− Implied Preemption – occurs when: (a) direct
conflict with state law; (b) field preemption
(appears from the law itself or legislative
history); OR (c) state law substantially interferes
with the objective of the federal law.
2
06
CONSTITUTIONAL LAW
H.
M
the law is not rationally related to a legitimate govt.
interest.
Incorporation Doctrine
Incorporation Doctrine – Most Amendments are
applicable to the States by incorporation through the
14th Amend. Due Process Clause.
M
Exceptions:
▪ 3rd Amend. – freedom from quartering soldiers.
▪ 5th Amend. – indictment by a grand jury.
▪ 7th Amend. – jury trial in civil cases.
▪ 8th Amend. – excessive fines.
Matthews v. Eldridge Factors → To determine the
procedure required, the court balances the:
1) Importance of the private interests;
2) Risk of error under current procedures and the
value of additional procedures; and
3) Importance of state interests and the burden that
arises from additional safeguards.
*Due process usually requires notice and an unbiased
hearing.
The 14th Amend. (equal protection) is incorporated into
the 5th Amend. Due Process Clause, making it
applicable to the Federal Govt.
I. Government Action (“State Action”)
H
Governmental Action – P must show that a violation is
attributable to govt. action, which applies to all levels
of local, state, and federal govt.
− The conduct of private actors is NOT protected
by the U.S. Constitution.
Exception – Courts will find govt. action of a private actor
when:
a) It is a traditional public function (powers
traditionally and exclusively reserved to the
govt.); OR
b) Significant govt. involvement exists to
authorize, encourage, or facilitate private
unconstitutional conduct.
J.
Due Process (5th & 14th Amendments)
Due Process Clause → No person shall be denied life,
liberty, or property without due process of law.
− Applicable to the States → 14th Amendment
− Applicable to Fed. Govt. → 5th Amendment
M
Substantive Due Process – the govt.’s power to
regulate certain activities.
Fundamental Rights Test – When regulating
fundamental rights, it must satisfy strict scrutiny →
Govt. must show the law is necessary to serve a
compelling governmental interest.
− Fundamental Rights = right to vote, interstate
travel, and privacy (marry, procreate, use
contraceptives, raise one’s child, keep family
together, maintain custody over children).
Procedural Due Process – Certain procedures are
required when the govt. deprives a person of life, liberty
(freedom), or property (an entitlement that is not
fulfilled).
K.
H
Equal Protection (5th & 14th Amendments)
Equal Protection Analysis – Prohibits the govt. from
denying citizens equal protection of the laws.
− Applicable to the States → 14th Amendment
− Applicable to Fed. Govt. → 5th Amendment
Discriminatory Classification – exists when:
a) a law is discriminatory on its face;
b) a law is facially neutral, but is applied in a
discriminatory manner; OR
c) a discriminatory motive exists.
When laws classify people into groups, apply the
appropriate test below based on the type of class:
− Strict Scrutiny → suspect class (race,
nationality, alienage classification under state
law) or infringes on a fundamental right.
• Govt. must show the classification is
necessary to serve a compelling
government interest.
− Intermediate Scrutiny → quasi-suspect class
(gender, non-marital child, undocumented alien).
• Govt. must show the classification is
substantially related to an important
governmental interest.
− Rational Basis → all other classes.
• Plaintiff must show the classification is
not rationally related to a legitimate
governmental interest (any conceivable
interest is sufficient).
Non-Fundamental Rights Test – When regulating
activities that do not constitute a fundamental right, it
must meet the rational basis test → Plaintiff must show
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3
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CONSTITUTIONAL LAW
L. Takings (5th Amendment)
M
Takings – Govt. MAY take private property for public
use if it provides just compensation.
− Public use = there is a reasonable belief that it
will benefit the public.
− Just compensation = fair market value at the
time of the taking.
N.
M
Laws that DO NOT discriminate (but that have some
relationship to religion) will be upheld if:
1) it has a secular purpose;
2) it’s primary effect does not advance or inhibit
religion; AND
3) it does not excessively entangle the govt. with
religion.
M
M
Laws of general applicability that cause unintentional
burdens on religion are CONSTITUTIONAL, and do not
offend the Free Exercise Clause.
− Examples → illegal drug use, animal sacrifice.
Other Protections
Privileges & Immunities Clause – Under the P&I
Clause (Art. IV, Sec. 2), States CANNOT intentionally
discriminate against non-residents concerning:
a) Civil liberties (i.e. right to vote, travel
interstate); OR
b) Important economic activities (i.e. ability to
earn a livelihood).
*The P&I Clause DOES NOT protect aliens or
corporations.
Regulations will be UPHELD if the State is justified,
when:
1) a substantial reason exists; AND
2) the discriminatory law has a substantial
relationship to that reason.
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Free Exercise Clause – Prohibits the govt. from
interfering with the exercise of religion.
Laws designed to interfere with religion are subject to
strict scrutiny → Govt. must show that:
1) the law is narrowly tailored,
2) to achieve a compelling govt. interest, AND
3) that the least restrictive means was used.
Conditions on Approval of Permits → DO NOT
constitute a taking if:
1) Essential nexus between state interest and
permit condition exists; AND
2) Govt. makes an individualized determination that
the condition is roughly proportional to
advancing the state interest.
M.
Establishment Clause – Prohibits the govt. from
establishing a religion OR endorsing/supporting religion.
Laws that discriminate against a religion MUST satisfy
strict scrutiny → Govt. must show that:
1) the law is narrowly tailored,
2) to achieve a compelling govt. interest, AND
3) that the least restrictive means was used.
Possessory (Per Se) Taking – Govt. physically
occupies the property (even if it’s just a small portion).
Regulatory Taking – Property becomes economically
unviable due to a regulation. Courts determine whether
a regulatory taking occurs by analyzing:
− Penn Central factors → (1) economic impact of
regulation on claimant; (2) extent of interference
with the investment-backed expectations; and
(3) character of regulation.
*Sup. Ct. has upheld zoning laws when the govt.
reasonably concluded that the health, safety, morals, or
general welfare would be promoted.
Freedom of Religion (1st Amendment)
O. Freedom of Speech (1st Amendment)
1st Amendment protects the right to freedom of speech
and expressive activities that constitute speech.
− Applicable to govt. by incorporation through the
14th Amendment.
The right to anonymous speech and the right not to
speak is protected under the 1st Amendment.
− Conduct that has no communicative value is
NOT protected.
M
Content-Based vs. Content Neutral Restrictions
Content-Based Restrictions – Govt. regulations
regarding the content of speech (subject matter or
viewpoint) are subject to strict scrutiny.
− Strict Scrutiny → Govt. must show (1) the
regulation is narrowly tailored, (2) to achieve a
compelling govt. interest, AND (3) the least
restrictive means was used.
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CONSTITUTIONAL LAW
Content-Neutral Restrictions – Govt. MAY regulate the
time, place, and manner of content-neutral speech if it
satisfies intermediate scrutiny.
− Intermediate Scrutiny → Govt. must show that
(1) the regulation is narrowly tailored, (2) to
achieve a significant government interest, AND
(3) it leaves open alternative channels of
communication.
H
M
Obscenity → Not protected
Material is obscene when it:
1) Appeals to prurient interest (sexual interest) of
an avg. person under today’s community
standards;
2) Is patently offensive; AND
3) Lacks any serious artistic, literary, or scientific
value.
Mere private possession of obscene material by an adult
inside the home CANNOT be made criminal.
− Exception → child pornography
M
Commercial Speech → Given fewer protection
Govt. MAY regulate truthful, non-misleading commercial
speech if the regulation:
1) Directly advances,
2) A substantial governmental interest, AND
3) Is no more extensive than necessary
(reasonably tailored) to serve that interest.
Public Forums for Speech
Public Forum = Place traditionally available to the
public for speech (i.e. parks, streets, public sidewalks).
− Content-Based Restriction → Must satisfy Strict
Scrutiny.
− Content Neutral Restriction → Govt. MAY
regulate time, place, and manner if it satisfies
Intermediate Scrutiny.
Designated Forum = A place not traditionally made
available to the public for speech, but the govt. chose to
make it available (i.e. school makes a classroom open
for club meetings).
− Treated the same as a Public Forum.
False/Misleading Commercial Speech → Not
protected
M
Public School Students – Students DO NOT lose their
1st Amendment free speech rights at school, BUT
schools are given great latitude to regulate speech.
− A school MAY regulate speech if it shows that
the conduct regulated would materially and
substantially interfere with the operation of
the school.
M
Government Employees
Limited Forum = Non-public forums that were
specifically designated by the government as open to
certain groups or topics (i.e. municipal meeting rooms).
− Treated the same as a Non-Public Forum.
Non-Public Forum = Public places traditionally limited
for speech (i.e. military bases, schools, jails, airports).
− Government may regulate speech if: (1)
reasonable, AND (2) viewpoint neutral.
Two-Step Test to determine if their speech is protected:
▪ Step 1: Did employee speak as a citizen on a
matter of public concern?
o If no → speech is not protected
o If yes → go to Step 2
▪ Step 2: Did the govt. entity have an adequate
justification for treating the employee
differently from any other member of the
general public (based on the govt. interests as
an employer)?
o The court must balance the employee’s
rights vs. the govt. employer’s interests.
Private Property = No right to access another’s private
property for speech.
M
Fighting Words → Not protected
Fighting words = words which by their very utterance:
a) Inflict injury; OR
b) Tend to incite an immediate breach of the
peace.
M
Incitement of Imminent Lawless Action → Not
protected
May be outlawed if the speech:
1) Advocates the use of force or illegality;
2) Directed to inciting/producing imminent lawless
action (intent); AND
3) Likely to incite/produce such action (there is a
clear and present danger that a listener will act).
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If a govt. employee speaks pursuant to their official
duties, then the speech is NOT protected.
M
Expressive Conduct / Symbolic Speech = the
expression of ideas through non-verbal actions.
− Treated the same as verbal speech.
5
06
M
CONSTITUTIONAL LAW
Prior Restraint – occurs when the govt. attempts to
prohibit speech before it happens through a court order
or licensing requirement.
− Generally disfavored and unconstitutional,
except in very limited circumstances (i.e. where
national security is at stake).
− Court orders preventing speech must satisfy
Strict Scrutiny.
Procedural Safeguards for Licensing – Are permitted
if:
1) Govt. has an important reason;
2) Specific, articulated standards to remove
discretion; AND
3) Procedural safeguards are in place, including a
prompt final judicial decision when a license is
denied.
M
Vague & Overbroad Laws → are unconstitutional
Unduly Vague = does not put the public on reasonable
notice as to what is prohibited.
Overbroad = regulates more speech than is
constitutionally permitted.
P. Freedom of the Press (1st Amendment)
M
Defamation & Actual Malice Standard – The press is
afforded heightened protection under the 1st
Amendment for Defamation lawsuits depending on the
type of person.
Defamation Elements – P must prove:
1) a false defamatory statement (a statement that
tends to harm the reputation of another);
2) of and concerning the P made by D;
3) publication by D to a third-party; AND
4) damages.
M
Disclosure of Private Facts & Generally Applicable
Laws – 1st Amend. protects the press from liability
when:
1) publishing truthful private facts,
2) regarding a matter of public concern,
3) where info was legally obtained by the publisher,
AND
4) there is no knowledge that the info was obtained
illegally (if illegally obtained info was published).
1st Amend. DOES NOT protect the press from liability
for violating generally applicable laws.
Q. Freedom of Association (1st Amendment)
M
Freedom of Association – Is a fundamental right under
the 1st Amendment.
The govt. may only regulate the right to freely
associate in a group if it satisfies Strict Scrutiny.
− Strict Scrutiny → Govt. must show (1) regulation
is necessary, (2) to achieve a compelling govt.
interest, AND (3) the least restrictive means was
used.
The govt. may punish a person’s membership in a
group if it proves the:
1) Group is actively engaged in illegal activity or
incites imminent lawless action;
2) Person has knowledge of the group’s illegal
activities; AND
3) Person has the specific intent of furthering those
activities.
Public Official or Public Figure → P must also prove
actual malice to be successful; that Defendant spoke
with either:
a) Recklessness; OR
b) Knowledge of its falsity.
*Proof of negligence is insufficient.
Private Citizen speaking on a matter of public
concern → To be successful, P must also prove that the
speaker was negligent.
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6
07
CONTRACTS
▪
Applicable Law
H
Sale of Goods Contracts – UCC Article 2 governs all
sale of goods contracts.
− Goods = all things movable at the time of
identification to the contract (except
money/currency).
*But, Common Law principles continue to apply, unless
the UCC specifically displaces them.
Acceptance – A manifestation of assent to the terms of
the offer.
− Performance may be adequate.
▪ Bilateral Contracts – start of
performance manifests acceptance.
▪ Unilateral Contracts – only makes the
offer irrevocable (acceptance only when
completed).
− Rejection – a manifestation of intent not to
accept an offer.
▪ Offer is terminated upon receipt by
offeror.
▪ Cannot accept an offer after it is
rejected.
− Counteroffers – both a rejection and new offer.
A sale of goods contract may be made in any manner
sufficient to show agreement.
M
UCC vs. Common Law
UCC Art. 2 → Applies to sale of goods contracts.
Common Law (CL) → Applies to all other contracts.
Mixed Contracts → The predominant purpose of the
contract determines which law governs.
A.
Formation of Contracts
H
Requirements to Form a Valid Contract
Elements: (1) mutual assent (offer and acceptance), (2)
consideration, AND (3) no defenses to formation.
H
Mutual Assent – Requires (1) an offer by one party,
AND (2) acceptance of that offer by another party.
H
Timing of Acceptance / Revocation & Mailbox Rule
− Acceptance → offer is accepted when sent or
communicated.
− Revocation → offer is revoked when received
by the offeree. Cannot revoke an offer after it’s
accepted.
− Mailbox Rule:
▪ Acceptance sent by mail is deemed to
be accepted once placed in the mail
(does not apply to option deadlines).
▪ Revocation sent by mail is deemed
effective when received by the offeree.
M
Battle of the Forms
Offer – A manifestation of intent to enter into a contract,
with definite or reasonably certain terms, communicated
to an identified offeree.
−
−
−
Termination – Offers can be terminated before
acceptance by: (a) rejection or counter-offer; (b)
lapse of time; (c) revocation; OR (d)
death/incapacity.
Revocation – An offer may be revoked at any
time before acceptance through unambiguous
words or conduct indicating an unwillingness
or inability to contract.
▪ Indirect Revocation = when (1) offeror
takes definite action inconsistent with
entering into a proposed contract; AND
(2) offeree acquires reliable info to that
effect.
Irrevocable Offers:
▪ Option contracts – if consideration is
given to keep an offer open.
▪ Merchant’s firm offer – offer by
merchant, in a signed writing, stating
offer will be held open with max time up
to 3 months, separately signed by
offeror.
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Offer was relied on to the offeree’s
detriment.
Mirror Image Rule (CL) – Acceptance must exactly
mirror the offer; any variations constitute a counteroffer.
UCC Exception – Acceptance DOES NOT have to
mirror the offer.
BUT, different or additional terms are included only if:
1) Both parties are merchants;
2) The term is not a material change;
3) Offer does not expressly limit acceptance to the
exact offer; AND
4) No objection was made within a reasonable
time.
*Material change = likely to cause hardship/surprise (i.e.
disclaimer of warranties or arbitration clause).
1
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CONTRACTS
M
Implied-in-Fact Contracts – A contract is created by
conduct if:
1) The conduct is intentional; AND
2) Each party knows (has reason to know) the
other party will interpret the conduct as an
agreement.
M
Indefiniteness / Absence of Terms – If terms of an
agreement are not certain (cannot be ascertained to a
reasonable degree of certainty), then it’s NOT
enforceable.
UCC Exception – No consideration is required for
contract modifications made in good faith.
− But must have a writing if: (a) it falls within the
Statute of Frauds; OR (b) the original contract
states that modifications must be made in
writing.
B.
M
Incapacity – Must have capacity in order to enter into a
contract.
− Lack of Capacity = (a) minors – persons under
18yrs old; or (b) lack of mental capacity –
person cannot understand the meaning and
effect of a contract.
▪ BUT, minors are bound for contracts for
necessities (food, shelter, clothing).
*Contract is voidable by the person who lacked capacity.
M
Duress – 2 types:
Indefinite Duration = contract is generally invalid.
UCC (sale of goods) → If both parties are merchants,
the only essential term is quantity.
− If no agreement on price, a reasonable price
term will be supplied under the UCC.
H
Consideration – Bargained for exchange of any act or
forbearance that benefits the promisor or causes
detriment to the promisee.
− Past / Moral Consideration → is not sufficient.
− Merchant’s Firm Offer → may be enforced
without consideration.
− Illusory Promises → are invalid; occurs when
one party has no obligation to perform.
Exceptions to Consideration Requirement (Rest. 2nd):
− Material Benefit Rule – a promise made in
recognition of a benefit previously received is
binding to the extent necessary to prevent
injustice.
▪ BUT, not applied when: (a) conferred as
a gift; or (b) value of the promise is
disproportional to the benefit conferred.
− Promissory Estoppel – Applies when: (1) a
party reasonably and foreseeably relied to his
detriment on other party’s promise, (2) the
promisor reasonably expected a change of
position in reliance of the promise, AND (3) it’s
necessary to avoid injustice.
H
Physical Compulsion – contract is void
Occurs if a person physically compels another person to
agree to a contract (i.e. physically forcing someone to
sign or by gun-point).
Economic Duress – contract is voidable
Occurs when:
1) an improper threat is made;
2) that induces a party;
3) who has no reasonable alternative;
4) to enter into a contract.
*A mere threat to breach a contract (without more) is
generally insufficient.
M
Undue Influence – Requires:
1) Unfair persuasion of a person,
2) Who is either:
a) under the domination of a person
exercising influence; or
b) justified in assuming the other person
will act in their interest / welfare because
of the relationship between them (i.e.
family).
*Contract is generally voidable by the victim.
M
Mistake – 2 types:
Modification of Contracts
Pre-Existing Duty Rule – Under the common law, past
performance or a pre-existing duty is NOT adequate
consideration.
− Exceptions: (a) an addition or change in
performance; OR (b) a fair and equitable
modification due to severe unanticipated
circumstances + contract isn’t fully performed by
either party.
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Defenses to Enforceability
Mutual Mistake – contract is voidable (may be
rescinded/reformed).
− Elements → (1) both parties are mistaken as to
a basic assumption, (2) the mistake is material,
AND (3) the person asserting the mistake did
not bear the risk of the mistake.
2
07
CONTRACTS
Unilateral Mistake – generally NOT a valid defense
− Elements → (1) a mistake by one party, (2) that
is unknown to the other party, (3) concerning a
basic assumption, (4) that has a material effect.
▪ BUT, a contract is voidable by the
mistaken party if: (a) one party knew or
had reason to believe of the mistake;
OR (b) the mistake makes the contract
unconscionable.
− A mistake as to price/value is NOT considered
material.
M
Misrepresentation – contract is voidable by the injured
party.
Fraudulent Misrepresentation – Occurs when: (1) D
knowingly, (2) made a false representation, (3) of
material fact, AND (4) the other party reasonably relies
on the misrepresentation to his detriment.
Non-Fraudulent Misrepresentation: Occurs when: (1)
a party/agent, (2) makes a statement of material fact, (3)
that is false (no wrongdoing required), (4) inducing a
contract, AND (5) the other party reasonably relied on
the misrepresentation to his detriment.
Concealment = an affirmative act intended to keep
another person from learning a fact.
− Concealment is deemed a misrepresentation.
BUT, there is no duty to disclose unless:
a) A fiduciary relationship exists;
b) It’s necessary to correct an earlier mistake;
c) Active concealment occurs; OR
d) A seller of real property knows material facts
that affect the value of the property (that buyer is
unaware of and cannot reasonably discover).
M
Illegality & Public Policy – Courts will NOT enforce
contracts that are illegal or contrary to public policy.
− Contract is void if the illegality existed at the time
of contract formation.
− Performance is discharged if the contract
subsequently became illegal.
− A contract with an illegal purpose is voidable by
the party who did not know of the illegal
purpose.
M
Unconscionability – occurs when the contract/term
shocks the conscious of the court.
−
Substantive Unconscionability – contract
contains terms that are obviously unfair and
one-sided in favor of the party with the superior
bargaining power.
If unconscionable, the court may:
a) enforce the contract without the unconscionable
term; OR
b) limit the application of the term.
H
Statute of Frauds – Contract is not valid unless in a
writing signed by the party to be charged.
Writing Requirement: Writing must (1) be signed by the
party to charged, (2) reasonably identify the subject
matter, (3) indicate a contract was made, AND (4) state
the essential terms.
Contracts Subject to Statute of Frauds:
1) Marriage contracts
2) Suretyship – a promise to pay the debt of
another.
▪ Main Purpose Exception → no writing is
required if the main purpose was to
benefit the surety himself.
3) Contracts that cannot be fully performed
within 1 year.
4) Sale of real property or creating an interest in
land.
5) Promise to pay an estate’s debt from personal
funds of the Executor or Administrator.
6) Sale of goods for $500 or more (contract must
contain the parties, quantity, and nature of
goods).
▪ Exceptions:
i. Merchant’s Confirmatory
Memorandum – contract between
two merchants, a writing signed
only by the party enforcing it, and
other party did not object promptly.
ii. Goods Accepted or Paid For –
but only applies for those goods,
not the whole contract.
iii. Custom Made Goods – seller
made substantial start and the
goods are not suitable for sale in
the ordinary course of seller’s
business.
iv. Admission During a Judicial
Proceeding.
Usually need BOTH:
− Procedural Unconscionability – one party has
a superior bargaining position over the other
party and uses that power to their advantage.
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3
07
CONTRACTS
C.
M
c) a new, unanticipated law/regulation making
performance extremely and unreasonably
difficult/expensive.
Contract Content & Meaning
Parol Evidence Rule – A party CANNOT introduce a
prior or contemporaneous agreement (oral/written) that
contradicts a later written contract.
*Rest. 2nd of Contracts replaced the term “Impossibility”
with “Impracticability”.
Exceptions:
1) To correct a clerical error or typo.
2) To establish a defense against formation.
3) To interpret vague or ambiguous terms (but
courts will interpret using the Plain Meaning
Rule).
4) To supplement a partially integrated writing.
Impracticability – Performance is discharged when:
1) an event occurs after contract formation,
2) that is unanticipated by both parties,
3) making performance extremely and
unreasonably difficult/expensive.
Frustration of Purpose – Discharges performance
when the purpose of the contract no longer exists.
Occurs when:
1) a party’s principal purpose is substantially
frustrated,
2) by an unforeseeable superseding event outside
their control, AND
3) both parties knew the purpose at the time of
formation.
Partially Integrated Writing = the writing does not
contain a complete statement of all the terms.
− Proof is allowed if it does not contradict the
writing.
Fully Integrated Writing = a complete and exclusive
statement of terms; discharges prior agreements.
− Merger clause is evidence that the writing is
complete on its face (fully integrated).
M
The Parol Evidence Rule DOES NOT apply to
subsequent agreements.
D.
M
Material Breach (Substantial Performance Doctrine)
– Occurs when a party DOES NOT render substantial
performance.
− A material breach excuses the non-breaching
party’s performance.
Performance, Breach, & Discharge
Condition Precedent – Makes performance conditional
upon the completion of the condition.
To determine if the breach is material, courts analyze:
1) Extent of performance;
2) Adequacy of compensation for loss to the nonbreaching party;
3) Hardship;
4) Likelihood the breaching party will cure; and
5) Whether the breach was intentional.
BUT, the condition is excused when:
a) the protected party fails to make a good faith
effort to satisfy the condition; OR
b) waiver (voluntarily giving up protection) – but
can retract the waiver if the other party has not
relied on it.
M
M
Obligation of Good Faith & Fair Dealing – Every
contract contains an implied obligation of good faith and
fair dealing to act honestly and fairly.
− UCC → requires (1) honesty in fact, AND (2)
observance of reasonable commercial standards
of fair dealing.
Impossibility, Impracticability, & Frustration of
Purpose
Impossibility – Performance is discharged when it’s
objectively impossible to perform because of:
a) death or incapacity of a person necessary to
effectuate the contract;
b) unanticipated destruction of the subject
matter of the contract; OR
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Material Breach vs. Minor Breach (Common Law)
Minor Breach – DOES NOT excuse performance.
− But, the non-breaching party may bring a
separate action for damages resulting from the
breach.
M
Divisible Performance – Treated as multiple contracts.
− Performance of each part entitles a party to
payment for that part.
M
UCC Perfect Tender Rule & Exceptions
Perfect Tender Rule → Seller must deliver conforming
goods.
− The smallest non-conformity is a breach, and
buyer may reject all or a portion of the goods.
− A rejection of goods must be made within a
reasonable time.
4
07
CONTRACTS
Demand for Adequate Assurances – If there are
reasonable grounds for being insecure about
performance, a party may make a written request for
adequate assurances from the other party that it will
perform.
− If the other party DOES NOT give assurances
after asked to do so, the requesting party may
treat that as an anticipatory repudiation.
Two Exceptions:
Right to Cure – A seller has a right to cure when:
a) Time for performance has not yet expired; OR
b) The seller will have further reasonable time to
cure if seller had reasonable grounds that
substitute goods would be accepted (i.e. same
type of non-conforming goods had been
accepted by the buyer in the past).
Installment Contract
− May only be cancelled when an installment is so
defective that it substantially impairs the value of
the entire contract.
− Buyer can reject an installment only if the nonconformity substantially impairs that installment
and the time to cure has past.
H
M
UCC Revocation of Acceptance
If the party fails to satisfy the accord, the other party may
sue either under:
a) the original contract; OR
b) the accord terms.
Rejection of Goods – If a buyer fails to reject goods
after a reasonable opportunity to inspect the goods, the
goods are deemed accepted.
Revocation of Acceptance – After acceptance, a buyer
may later revoke that acceptance of goods only if:
1) the non-conformity substantially impairs the
value of the goods; AND
2) the defect was difficult to discover (a latent
defect) or the buyer had a reasonable
assumption the defect would be cured.
E.
M
Anticipatory Repudiation – Occurs when a party
unequivocally communicates that they are unable or
unwilling to perform under the contract.
If occurs, the non-breaching party may:
a) treat the contract as repudiated and sue for
damages before the time of performance is due;
b) treat the contract as discharged;
c) wait until performance is due and then sue; OR
d) urge the other party to perform.
A party can retract its repudiation and restore the
contract UNLESS the non-breaching party has:
a) Cancelled;
b) Materially changed its position; OR
c) Indicated that they consider the repudiation final.
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Warranties (UCC Art. 2)
Express Warranty – Seller is liable for breach of an
express warranty.
− CANNOT be disclaimed by seller.
An express warranty is created when:
1) Seller makes an affirmation of fact, promise,
description, or provides a sample,
2) Relating to the goods, AND
3) That becomes part of the basis of the bargain.
Revocation of acceptance MUST occur within a
reasonable time after the buyer discovers or should
have discovered the nonconformity.
− Not effective until buyer notifies the seller.
− Must occur before there is any substantial
change in the goods (not caused by their own
defects).
H
Accord & Satisfaction
Accord – An executory contract between the parties
promising to relieve a party of their contractual
obligations in return for a specific act.
Satisfaction – Upon satisfaction of the accord (the new
act), the party is excused from further performance
under the original contract.
No intent is needed to create an express warranty, or
that seller use the words “warranty” or “guarantee”.
− An opinion DOES NOT create an express
warranty.
M
Implied Warranty of Merchantability – All goods sold
by a merchant (dealing in goods of the kind) must be fit
for their ordinary purpose.
− Disclaimer of Warranty → Must do so expressly
in a conspicuous writing (i.e. “as is” or “with all
faults”).
M
Implied Warranty of Fitness for a Particular Purpose
– Applies when:
1) Seller knows (or has reason to know) of the
buyer’s particular purpose for which the goods
are required; AND
2) Buyer relies on the seller’s skill or judgment to
select or furnish suitable goods.
5
07
CONTRACTS
−
May be Disclaimed by:
a) a conspicuous writing; OR
b) waiver by the buyer – if defects can be
discovered by a reasonable inspection.
H
Warranty of Title – warrants that title:
1) shall be good/rightful; AND
2) is free from any security interests, liens, or
encumbrances.
*May be expressly disclaimed by specific language or
circumstances.
M
Limiting Damages for Breach of Warranty – is
ALLOWED, so long as not unconscionable at the time
the contract was formed.
− Exception #1 → Limiting a buyer’s remedy for
personal injuries for consumer goods is
presumed to be unconscionable.
− Exception #2 → The limited remedy fails of its
essential purpose.
F.
M
−
Limitations – An assignment is valid UNLESS:
a) It materially alters what is expected → (i)
changes the duty of obligor, (ii) increases the
burden/risk imposed on obligor, (iii) materially
impairs obligor’s chance of obtaining return
performance, or (iv) materially reduces the value
of return performance;
b) It’s prohibited by law or public policy; OR
c) It’s precluded by contract – (i) prohibitions –
assignment is valid & assignor is liable for
damages; (ii) invalidations – assignment is void.
Rights of Assignee & Assignor:
− Assignee may sue obligor for non-performance.
− Any defense against assignor may be used
against assignee.
− Assignee may sue assignor for wrongful
revocation of an assignment or for breach of an
implied warranty.
Third-Party Rights
Third-Party Beneficiaries & Enforcement of Rights –
Generally, a party who is not in privity of contract with
another party CANNOT assert a claim for breach of
contract.
− HOWEVER, a third-party beneficiary has the
same rights as those in privity, and can sue for
breach of contract.
Multiple Assignments:
If Gratuitous Assignment → Last assignee prevails.
If for Consideration → First assignee prevails UNLESS
the later assignee (1) has no notice, and (2) is the first to
obtain payment/indicia of ownership.
M
Intended vs. Incidental Third-Party Beneficiaries
Intended Third-Party Beneficiary → Not a party to the
contract, but has rights because the contracting parties’
performance were intended to benefit the identified thirdparty.
Incidental Third-Party Beneficiary → Someone who
just happens to benefit from the contract, but has NO
legal rights.
Enforcement of Rights – A third-party beneficiary may
enforce rights under a contract ONLY IF the rights have
vested.
− Vesting occurs when the third-party → (a)
manifests assent to the promise in the contract;
(b) detrimentally relied; OR (c) sues to enforce.
− Once vested, the contract CANNOT be changed
or modified without consent of the third-party.
M
Assignment of Rights – Rights and benefits may be
transferred to a third-party if:
1) Assignor manifests his intent to transfer; AND
2) Assignee assents to the assignment.
Consideration is NOT required for an assignment.
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If consideration is given, the assignment is
irrevocable.
Gratuitous assignments may be revoked.
Delegation of Duties – All contract duties are delegable
UNLESS:
a) the contract prohibits delegation or assignment;
b) delegation is against public policy;
c) it’s a personal service contract the calls for
exercise of personal skill/discretion; OR
d) the delegation materially alters the expectancy
of the obligee.
*An assignment generally includes a delegation of the
unperformed duties.
The delegating/assigning party remains liable for nonperformance unless a novation occurs.
G.
H
Remedies
Expectation Damages – Arise directly from the breach,
and are meant to put the non-breaching party in the
same position it would have been in but for the
breach.
To recover, damages must be → (1) caused by
D (actual cause); (2) foreseeable (proximate
cause); (3) certain (not speculative); AND (4)
unavoidable (reasonable steps were taken to
mitigate damages).
6
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CONTRACTS
H
Consequential Damages – Arise indirectly from the
breach (i.e. lost profits).
− To recover, damages must be → (1) reasonably
foreseeable at the time of contract formation; (2)
arise from P’s special circumstances that D
knew of (or had reason to know of); AND (3)
reasonably certain (not speculative).
M
Punitive Damages – Meant to punish a wrongdoing
party.
− NOT usually available for breach of contract.
− May be awarded for breach of contract involving
fraud or tort claims.
M
Specific Performance – Is an equitable remedy; is only
available if monetary damages are inadequate to
compensate an injured party.
− NOT awarded for personal service contracts, but
injunctive relief may be awarded.
H
UCC Seller’s Remedies & Damages
Seller’s Remedies – When a buyer breaches, a seller
may recover/do any of the following:
a) Withhold Delivery of goods;
b) Cancel the contract;
c) Cover Damages – difference between the
resale price and the contract price (used when
seller resold in good faith);
d) Market Damages – difference between market
price and contract price;
e) Lost Volume Seller – can recover lost profits on
a sale if the seller regularly sells the goods at
issue and has unlimited inventory;
f) Stop Delivery of goods (if buyer is insolvent and
goods are in possession of carrier/bailee); OR
g) Replevy identified goods from an insolvent
buyer (in certain instances).
*Seller is also entitled to incidental damages – the
commercially reasonable costs as a result of the breach.
Right to Replevy Identified Goods – A seller is allowed to
replevy goods when:
1) Buyer was insolvent when it received the goods;
AND
2) Seller makes a demand within 10 days of buyer
receiving the goods.
*A buyer’s misrepresentation of solvency in writing
within 3 months prior to the delivery of goods REMOVES
the 10-day limitation above.
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H
UCC Buyer’s Remedies & Damages
When a seller breaches, a buyer may recover any of the
following:
a) Cover Damages – difference between contract
price and price of substitute goods (if purchased
in good faith);
b) Market Damages – difference between market
price and contract price (if not in good faith or no
cover at all); OR
c) Loss-in-Value Damages – difference between
the value as promised and the value of the nonconforming goods (when buyer kept the nonconforming goods).
M
Waste Doctrine – When an award for cost of completion
is wasteful, a court may award damages for diminution
in value (the difference in value of the property/land).
− This may be awarded instead of expectation
damages.
Waste doctrine applies if:
1) Contractor performs in good faith, but defects
exist; AND
2) Remedying the defects would entail economic
waste (the cost of completion greatly exceeds
the value of the completed work).
*Normally seen in the construction contract context.
H
Restitution (Unjust Enrichment) – Awarded to prevent
unjust enrichment when one party confers a benefit.
− Damages = value of benefit conferred.
− A party cannot recover both restitution and
expectation damages.
M
Rescission – Treats the original contract as cancelled.
− Available when there is a problem with contract
formation.
A contract will NOT be rescinded if:
a) there is a valid equitable defense; OR
b) plaintiff sued for damages under the contract in
a prior action
*A party may sue for both damages and rescission at the
same time.
H
Mitigation of Damages – A party MUST take
reasonable step to mitigate losses.
− If a party fails to do so, the court will reduce the
total damages by the amount that could have
been avoided.
*Affirmative steps to avoid loss are NOT required if they
involve undue risk, burden, or humiliation.
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Model Penal Code (MPC):
Purposefully – conscious object to engage in conduct
or cause a certain result.
Knowingly – aware that conduct is of a particular nature
or will cause a certain result.
Recklessly – consciously disregards a substantial and
unjustifiable risk + act is a gross deviation from how a
reasonable person would act.
− OR when a person creates such a risk, but is
unaware of it solely by reason of voluntary
intoxication.
Criminal Negligence – should have been aware of a
substantial and unjustifiable risk + that failure is a gross
deviation from the standard of care.
A. General Principles
H
Elements of a Crime – Prosecution must prove all
elements of a crime beyond a reasonable doubt:
1) Physical Act (actus reus);
2) Mental State (mens rea);
3) Causation (both actual and proximate cause);
AND
4) Concurrence (mental state and physical act
occur at the same time).
M
Acts and Omissions
Physical Act (actus reus) of the D must be voluntary.
Omission – is generally is NOT criminal unless:
1) D had a legal duty to act;
2) D had knowledge of facts concerning the duty to
act; AND
3) It was reasonably possible for D to act.
Willful Blindness Standard (majority of states) – A
person is deemed to act knowingly when he is:
a) Aware that certain facts are highly probable; OR
b) Intentionally ignorant to certain facts.
*Knowledge may be proved by circumstantial evidence.
Duty to Act = contractual duty, parent-child relationship,
duty taken on voluntarily, statute creates a duty, or when
D creates the danger.
H
Causation – Requires both:
1) Actual Causation; AND
2) Proximate Cause.
B. Homicide
H
Actual Causation → present when the result/injury
would not have occurred “but for” the D’s conduct.
Proximate Cause → injury must be foreseeable from
D’s act (it was a natural probable consequence).
Superseding Intervening Cause – A third-party’s act
will break the chain of causation if the act was:
1) Independent; AND
2) Not foreseeable – it’s so out-of-the-ordinary that
it’s not fair to hold D liable for the crime.
H
1st Degree Murder – The killing was deliberate and
premeditated.
MPC Murder – Killing of a person committed: (a)
purposefully or knowingly; OR (b) recklessly under
circumstances manifesting an extreme indifference to
the value of human life.
− Felony Murder Rule → recklessness is
presumed for robbery, rape, arson, burglary, &
kidnapping.
Mental States – The intent element of a crime (mens
rea).
Common Law (CL):
Specific Intent – intent or desire to engage in the
conduct or cause a certain result.
General Intent – awareness of acting in a certain way.
Malice – reckless disregard of a known risk that harm
may occur.
Strict Liability – no mental state required; only the act is
required.
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Murder
Common Law & 2nd Degree Murder – Murder is the
(1) unlawful killing, (2) of a person, (3) with malice
aforethought.
− Malice Aforethought = (a) intent to kill, (b) intent
to inflict great bodily harm, (c) reckless disregard
of an extreme risk to human life (depraved-heart
murder), OR (d) intent to commit an inherently
dangerous felony (felony murder rule).
H
Manslaughter
Voluntary Manslaughter – Intentional killing of a person
with adequate provocation.
− Adequate Provocation = (1) D was provoked
(sudden and intense passion causing a loss of
control); (2) a reasonable person would have
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CRIMINAL LAW & PROCEDURE
been provoked; (3) not enough time to cool off;
AND (4) D in fact did not cool off.
M
Rape
Common Law – rape is the (1) unlawful sexual
intercourse, (2) of a woman by a man (not her husband),
(3) without her consent.
− Modern definition → includes marital rape (in
most states) and makes gender irrelevant.
MPC – a male who has sex with a female (not his wife)
is guilty of rape if: (a) he compels her by force/threat of
imminent death, serious bodily injury, extreme pain, or
kidnapping; (b) he secretly drugs her; (c) female is
unconscious; OR (d) female is less than 10 years old.
− Deviate Sexual Intercourse → has same
elements as above, but is gender neutral.
Statutory Rape – is the (1) unlawful sexual intercourse,
(2) with a person, (3) under the age of consent (as
defined by statute).
M
Assault & Battery
Battery – is the (1) unlawful application of force, (2)
directly or indirectly upon another person or their close
personal belongings, (3) resulting in injury or offensive
contact.
− Battery is a general intent crime.
− Intent to cause injury is NOT required.
Assault – either (a) an attempted battery, OR (b) the
intentional creation of a reasonable apprehension of
imminent bodily harm to a person.
M
Kidnapping & False Imprisonment
Kidnapping – is the (1) confining, restraining, or moving
of a person, (2) without authority of law.
− MPC → abducting another person: (a) for
ransom; (b) to facilitate a felony; (c) to inflict
bodily injury or terrorize; OR (d) to interfere with
a government/political function.
False imprisonment – is the (1) unlawful, (2)
confinement of a person, (3) against their will, (4) with
knowledge that the restriction is unlawful.
− MPC → when D knowingly restrains a person
unlawfully so as to substantially interfere with
the person’s liberty.
M
Arson – is the (1) malicious, (2) burning, (3) of a
dwelling, (4) of another.
− Majority of States → includes damage (i) caused
by explosives, and (ii) to other types of buildings
and vehicles.
Involuntary Manslaughter – Unintentional killing of a
person committed:
a) recklessly;
b) under the misdemeanor-murder rule;
c) during a non-dangerous felony; OR
d) with criminal negligence (in some states).
MPC Manslaughter – Killing of a person committed:
a) recklessly; OR
b) committed under the influence of extreme
mental or emotional disturbance for which there
is a reasonable explanation or excuse.
C. Other Crimes
H
M
H
Theft Crimes
Larceny – (1) trespassory taking, (2) and carrying away,
(3) of the personal property of another, (4) with the intent
to permanently deprive the owner of the property (intent
must exist at the time of taking).
Larceny by Trick – obtain possession (not title) of the
personal property of another by trick or deception.
False Pretenses – (1) obtain title, (2) to personal
property of another, (3) through an intentional false
statement of material fact, (4) with intent to defraud.
Embezzlement – (1) fraudulent or wrongful, (2)
conversion, (3) of personal property of another, (4) by a
person with lawful possession of the property.
− Intent to permanently deprive the lawful owner of
the property is required.
Receiving Stolen Property – when a person (1)
receives possession of stolen property, (2) who knows
the property is stolen when receiving it, (3) with the
intent to permanently deprive the owner of the property.
Robbery – is the (1) trespassory taking and carrying
away, (2) of the personal property of another, (3) in their
presence, (4) by the use of force or threat of immediate
physical harm, (5) with the intent to permanently deprive
the owner of the property.
− Armed Robbery = above elements + use of a
dangerous weapon.
Burglary – is the (1) breaking and entering, (2) of a
dwelling, (3) of another, (4) at night, (5) for the purpose
of committing a felony inside.
− Most jurisdictions extend burglary to include
breaking into any structure at any time.
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CRIMINAL LAW & PROCEDURE
Criminal Possession – The unlawful possession of an
item according to statute (i.e. weapon, drugs).
− To be found guilty, usually need both: (1)
knowledge of the possession; AND (2)
knowledge of what the item is.
*Solicitation merges with the substantive crime.
Renunciation – is an affirmative defense if Defendant:
1) voluntarily and completely renounces; AND
2) prevents the commission of the crime.
E. Parties to a Crime
D. Inchoate Offenses
M
M
Attempt – when a person (1) had specific intent to
commit a crime, AND (2) took an overt act sufficiently
beyond mere preparation (most states & MPC = a
“substantial step”; minority of states = proximate or
dangerously proximate).
− Attempt merges with the underlying crime.
An accomplice is liable for all crimes he committed and
all foreseeable crimes committed by the primary party.
− Merely being present or knowing a crime will
result DOES NOT create accomplice liability.
− Cannot be convicted if D is a member of a class
protected by the criminal law.
− Minority of states DO NOT allow accomplice
liability for involuntary manslaughter.
Abandonment / Withdrawal Defense:
Most States → NOT a defense once D has taken a
substantial step toward the crime (conduct beyond mere
preparation).
Minority States & MPC → Abandonment before the
completion of the crime is an affirmative defense if:
1) D voluntary renounces his criminal purpose;
AND
2) Completely abandons the effort to commit the
crime or otherwise prevents its commission.
M
Conspiracy – is a specific intent crime, and requires:
1) An express/implied agreement between two or
more persons;
2) Intent to enter into the agreement;
3) Intent to pursue an unlawful objective (common
law = all parties; MPC & modern trend = only
require one party’s intent); AND
4) Commission of an overt act in furtherance of
the unlawful objective (any act taken by a coconspirator is sufficient).
A conspirator is liable for the conspiracy, PLUS all
foreseeable crimes committed by co-conspirators in
furtherance of the unlawful objective.
− Withdrawal is NOT a defense for the
conspiracy, but it is a defense for crimes
committed by co-conspirators after the
withdrawal.
M
Solicitation – Elements:
1) D requests another person to commit a crime (or
join in the commission of a crime);
2) With specific intent that the crime be committed;
AND
3) The other person receives the request.
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Accomplice Liability – an accomplice is one who:
1) aids, abets, or facilitates the commission of the
crime; AND
2) has dual intent (intent to assist the primary party,
and intent that the crime be committed).
Withdrawal – is a defense if D withdraws before the
crime becomes unstoppable, and requires:
1) repudiating the encouragement given; AND
2) neutralizing any assistance.
F. Defenses
M
Duress – Is an affirmative defense, and excuses D’s
conduct if it was the result of:
1) a threat of imminent death or serious bodily
injury,
2) to the D or another, AND
3) D reasonably believed he was unable to avoid
the harm by non-criminal conduct.
*Most states → duress defense is NOT available for
intentional killings.
H
Insanity – D must have a mental disease or defect,
PLUS:
− M’Naghten Test → D is (a) unable to know the
wrongfulness of his conduct, or (b) unable to
understand the nature and quality of his acts.
− MPC Test → D was (a) unable to appreciate the
criminality of his conduct, or (b) unable to
conform his actions to the law.
− Irresistible Impulse Test → D’s mental illness
made him (a) unable to control his actions, or (b)
unable to conform his actions to the law.
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CRIMINAL LAW & PROCEDURE
−
Durham Test → D’s unlawful conduct was the
product of mental illness.
*Most states use the M’Naghten or MPC test.
M
G. Arrest, Search, & Seizure (4th Amendment)
M
Govt. Action – 4th Amend. grants a person protection
from unlawful government searches and seizures.
− Acts by private individuals are NOT protected.
Standing – Is required to challenge a search. Person
MUST have a reasonable expectation of privacy
regarding the place or item searched.
− Reasonable Expectation of Privacy = that which
they own or possess (applies to overnight guest
spaces).
Self-Defense & Defense of Others
Self-Defense – is a complete defense to a crime.
Non-Deadly Force → justified when (1) D reasonably
believes, (2) that he’s in imminent danger of being
harmed.
Deadly Force → justified when (1) D kills based on a
reasonable belief, (2) that he was in imminent danger of
being killed (or suffering great bodily injury), AND (3) the
use of deadly force was necessary.
− Minority of States → D has a duty to retreat
before deadly force may be used.
o BUT, D has no duty to retreat when: (a)
no opportunity to retreat; (b) he could
not retreat safely; or (c) if attacked in his
own home.
− An aggressor may only use force in selfdefense if: (a) he withdraws and communicates
it; OR (b) the other person escalates the fight
with deadly force and withdrawal is not possible.
Supreme Court has held NO privacy rights for:
(1) paint scrapings taken from a car; (2) bank account
records; (3) anything visible from public airspace; (4)
garbage left on the curb; (5) the sound of one’s voice; (6)
odors; (7) handwriting; and (8) anything that can be seen
in or across areas outside one’s home.
M
Arrests – To be proper, a police officer MUST have
probable cause → (1) trustworthy facts or knowledge,
(2) sufficient to warrant a reasonable person to believe,
(3) that the person committed a crime.
− Officer DOES NOT need firsthand knowledge (it
may be based on informant’s information).
− An arrest in/at someone’s home requires a
warrant (unless exigent circumstances).
M
Request for Info, Stop & Inquire, Stop & Frisk
Request for Information – allowed anytime except on
“whim or caprice”.
Stop & Inquire – police must have (1) a reasonable
articulable suspicion, (2) that criminal activity is afoot.
− Allows a brief detention for questioning.
Stop & Frisk – police must have (1) a reasonable
articulable suspicion, (2) that criminal activity is afoot,
and (3) that the person has a weapon.
− Plain Feel Doctrine → during the frisk, police
may only seize items reasonably believed to be
contraband or a weapon.
Defense of Others – use same rule as self-defense.
Imperfect Self-Defense – Mitigates murder to voluntary
manslaughter when: (1) D kills based on a good faith
belief of self-defense, (2) but such belief was
unreasonable.
M
Intoxication
Voluntary Intoxication = Ingesting an intoxicating
substance by D’s own free will.
− ONLY a defense to specific intent crimes.
Involuntary Intoxication = Ingesting an intoxicating
substance without knowledge or by force.
− Is a defense to ALL crimes → use same tests for
an insanity defense.
M
Mistake of Fact or Law
Mistake of Fact → is a defense if it negates the mental
state required for the crime.
Mistake of Law → generally NOT a defense.
Government Action & Standing
Reasonable Suspicion = quantum of knowledge
sufficient to induce an ordinarily prudent and cautious
person to believe that criminal activity is at hand.
Seizure = when a reasonable person would have
believed that he was not free to leave.
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08
H
CRIMINAL LAW & PROCEDURE
Warrant Requirement – a warrant is required for all
searches and seizures unless an exception applies.
A valid search warrant requires:
1) Probable cause – reliable info that evidence of
illegality will be found;
2) It must state with particularity the place and
items to be searched/seized; AND
3) Be issued by a neutral and detached
magistrate.
M
Consent – must be given freely, voluntarily, and
intelligently.
− A third-person with authority MAY consent.
− If 2 or more people share authority → any one of
them may consent, but police cannot search
private areas (that only the non-consenting
person has authority to give [i.e. private
bedroom]).
M
Inventory Search – allows a warrantless search when a
person is incarcerated OR for an impounded vehicle.
− Inventory search must be: (1) reasonable; AND
(2) conducted pursuant to established police
agency procedures (that are designed to meet
the legitimate objectives of the search while
limiting the discretion of the officer in the field).
M
Stop & Frisk – police must have (1) a reasonable
articulable suspicion, (2) that criminal activity is afoot,
and (3) that the person has a weapon.
− Plain Feel Doctrine → during the frisk, police
may only seize items reasonably believed to be
contraband or a weapon.
M
Special Need – applies in very limited circumstances.
Evidence obtained without a valid warrant is excluded
UNLESS it falls under an exception.
EXCEPTIONS TO WARRANT REQUIREMENT
M
M
M
M
Plain View Doctrine – police may seize items if:
1) observed in plain view (with any of the 5
senses),
2) from a place lawfully permitted to be, AND
3) probable cause exists to believe the items are
evidence of a crime or contraband.
Exigent Circumstances – allows a warrantless search
if:
a) evidence is evanescent (it will dissipate or
disappear);
b) it’s necessary to prevent the imminent
destruction of evidence;
c) the police are in hot pursuit of a felon and
evidence is in plain view; OR
d) the emergency aid exception applies.
Automobile Exception – allows a warrantless search if
probable cause exists that contraband/evidence of a
crime will be found in the vehicle.
− Police can search entire vehicle, PLUS
packages, luggage, containers that may
reasonably contain the items for which there is
probable cause.
− In order to search after a traffic stop → police
need probable cause prior to the search.
Search Incident to Arrest – police may search a
suspect’s person + “wingspan”.
− If arrested in an automobile → wingspan
includes the passenger’s compartment and any
containers found in the car (if reason to believe it
contains contraband).
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H. Confessions & Privilege Against SelfIncrimination
A confession may be excluded at trial under the 5th, 6th,
and/or 14th Amendments of the U.S. Constitution.
M
Due Process Clause (14th Amend.) – It’s a violation of
D’s rights if a confession is the product of police
coercion that overbears the suspect’s free will.
− Police MAY use coercive conduct (i.e. lying), as
long as it doesn’t overcome D’s free will.
H
Privilege Against Self-Incrimination (5th Amend.) –
protects the right to not incriminate oneself.
Miranda Rights – attach when a suspect is in a
custodial interrogation.
− Police must give Miranda warnings → (1) right to
remain silent, (2) anything said can be used
against suspect in court, (3) right to talk to an
attorney and have one present when they are
questioned, and (4) if cannot afford an attorney,
one will be provided.
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CRIMINAL LAW & PROCEDURE
*Statements made in violation of a suspect’s Miranda
rights are subject to the Exclusionary Rule.
−
Custodial Interrogation:
− Custody = the person reasonably believes they
are not free to leave.
− Interrogation = police knew (or should have
known) they were likely to elicit an incriminating
response.
−
−
Waiver of Rights – same as waiver under 5th Amend.
Statements / Acts Protected – only protects
statements and acts that are communicative or
testimonial in nature.
− Crying is NOT a testimonial communication.
− Miranda rights DO NOT apply to spontaneous
statements.
H
Public Safety Exception – a limited interrogation
without Miranda warnings IS ALLOWED when police ask
questions reasonably prompted by a public safety
concern or safety of the officer (i.e. to secure a
weapon).
Right to Counsel (5th Amend.) – SEE RULE IN
ABOVE SECTION.
− Attaches when a suspect is in a custodial
interrogation (Miranda rights).
− Suspect has the right to consult with an attorney
and have one present during questioning.
M
Right to Counsel (6th Amend.) – SEE RULE IN
ABOVE SECTION.
M
Effective Assistance of Counsel (6th Amend.) – D
has the right to effective assistance of counsel.
− Includes the effective aid in preparation and trial
of a criminal case.
I. Right to Counsel
Invoking Miranda Rights – it must be clear and
unambiguous.
− Once invoked, police must stop ANY
questioning. Additionally, D’s silence CANNOT
be commented on at trial.
Police may reinitiate questioning if:
1) Suspect is re-advised of his Miranda rights;
2) Has provided a knowing and intelligent waiver;
AND
3) Either (a) counsel is present; (b) suspect
initiates the communication; or (c) 14-days have
passed since the suspect was released from
custody.
Waiver of Rights – a valid waiver must be made
knowingly, intelligently, AND voluntarily.
− D must understand the nature of the right being
waived and the consequence for waiving it.
− Police failure to provide outside info DOES NOT
invalidate a waiver (unless the info was essential
to D’s ability to waive rights).
M
Attaches → once formal adversarial judicial
proceedings are commenced (formal charge,
preliminary hearing, indictment, arraignment).
Once rights attach, a suspect CANNOT be
questioned without a lawyer, and anything said
is inadmissible (unless a valid waiver occurs).
This right is offense-specific.
Right to Counsel (6th Amend.) – the accused has the
right to counsel in ALL criminal prosecutions (except
State misdemeanor prosecutions that do not carry a risk
of jail time).
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Ineffective Assistance of Counsel – D must show:
1) Counsel’s performance was deficient; AND
2) But for the deficiency, the result would be
different.
*If shown, the verdict MUST be reversed, and D is
entitled to a new trial.
J. Police-Arranged Identification Procedures
M
Line-Ups & Police-Arranged Identification
Procedures
Due Process Clause (14th Amend.) → violated when a
line-up is (1) unnecessarily suggestive, (2) resulting in a
substantial likelihood of misidentification.
− If violated → identification is inadmissible at trial.
Independent Source Rule → an in-court identification is
admissible at trial (even if a line-up is tainted) when it’s:
1) based on a witness’s previous knowledge;
2) trustworthy; AND
3) based on a previous transaction (i.e. the crime).
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CRIMINAL LAW & PROCEDURE
Right to Counsel (6th Amend.) → a person has the
right to counsel at a post-charge line-up.
− No right to counsel under 6th Amend. at a precharge line-up or photo-identification.
L. Fair Trial & Guilty Pleas
M
Right to a Jury Trial – 6th Amend. guarantees a
criminal defendant the right to a jury trial for offenses
where imprisonment is greater than 6 months.
− Minimum of 6 jurors is required, and a verdict
normally must be unanimous.
− Any fact (other than a prior conviction) that
increases the maximum penalty for a crime
MUST be submitted to a jury and proven beyond
a reasonable doubt.
M
Competence to Stand Trial – D is competent to stand
trial if he has:
1) a sufficient present ability to consult with his
lawyer (able to assist in preparing a defense);
AND
2) a rational and factual understanding of
proceedings.
*D cannot be tried if deemed incompetent (but
competence can be reassessed at a later date).
Miranda Rights (5th Amend.) → pre-trial identifications
(line-ups, photo identifications), blood tests, fingerprints,
and voice identifications are NOT protected by the 5th
Amendment.
− A suspect in custody CANNOT refuse to
participate in a line-up.
K. Exclusionary Rule
H
Exclusionary Rule – Evidence obtained in violation of
D’s 4th, 5th, or 6th Amendment rights is inadmissible at
trial.
− All derivative evidence is also inadmissible
under the fruit of poisonous tree doctrine.
Exceptions – Exclusionary Rule DOES NOT apply if:
a) Police had an independent source for the
secondary evidence;
b) Discovery of evidence was inevitable
regardless of the illegality;
c) Through the attenuation doctrine → when D’s
free will is restored through passage of time or
intervening events; OR
d) Police relied in good faith on a defective
warrant.
Limitations on Miranda Violations – In addition to the
above, the following limitations apply to Miranda
violations:
▪ Limitation #1 → Not required to suppress the
physical evidence found because of D’s
statements (as long as statement was
voluntary).
▪ Limitation #2 → Subsequent statements made
after Miranda warnings are admissible
UNLESS a previous statement was obtained
through the use of inherently coercive police
tactics offensive to Due Process.
▪ Limitation #3 → Statements in violation of
Miranda may be used to impeach D on crossexamination.
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M. Double Jeopardy
M
Double Jeopardy – Prevents a D from being
prosecuted twice for the “same offense”.
− Under Blockburger Test → two crimes are NOT
the “same offense” if each crime requires
proof of a fact which the other does not.
− A final judgment on a lesser offense bars
prosecution of a greater offense on the same
facts UNLESS the greater offense: (a) did not
exist at the time of trial; OR (b) was not
discovered despite due diligence.
Jeopardy Attaches → when a jury is impaneled and
sworn.
− Exceptions: (1) hung jury, (2) manifest necessity
exists to end the trial, OR (3) trial is terminated
at D’s request and it’s not an acquittal on the
merits.
7
08
CRIMINAL LAW & PROCEDURE
Sufficiency of Evidence – A court MUST enter a
Judgment of Acquittal if the evidence is insufficient to
sustain a conviction (when a reasonable jury would not
find that each element was proven beyond a reasonable
doubt).
− D may move for a Judgment of Acquittal either:
(a) at the close of its case-in-chief; OR (b) after
the close of all evidence.
N. Burden of Proof & Persuasion
H
Burden of Proof & Sufficiency of Evidence
Burden of Proof → Prosecution MUST prove every
element of a crime beyond a reasonable doubt.
− Burden of proof CANNOT be shifted to D.
− Making D prove affirmative defenses is allowed.
Presumptions for Jury Instructions – 2 types:
− Rebuttable Presumption (one that may be
disputed or overcome by additional evidence) →
violates the Due Process Clause if it shifts the
burden of proof to D.
− Irrebuttable Presumption (one that cannot be
disputed or overcome) → is a per se violation of
the Due Process clause.
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O. Appeal and Error
M
Harmless Error Rule – even if evidence is improperly
admitted at trial, a guilty verdict will stand if the
Prosecution can prove that the error was harmless
(that D would have been convicted anyway).
8
09
EVIDENCE
A.
H
Probative Value
Relevance & Rule 403 Exclusions
C.
M
Authentication of Evidence – All evidence MUST be
authenticated before being admitted.
− Physical Evidence → through witness
testimony or by evidence that shows it has been
held in a substantially unbroken chain of
custody.
− Voice Recordings → by anyone who has heard
the person speak and identified the recorded
person as the speaker.
M
Best Evidence Rule – the original writing, recording,
or photograph is required to prove its content UNLESS:
a) it’s a reliable duplicate (a photocopy);
b) all the originals are lost or destroyed, and not
by the offering party acting in bad faith;
c) an original cannot be obtained by judicial
process;
d) it was not produced after proper notice was
given to the party in control and against whom it
would be offered against; OR
e) it’s not closely related to a controlling issue.
Relevance – Evidence is relevant if:
1) it has any tendency to make a fact more or
less probable than it would be without it; AND
2) the fact is of consequence in determining the
action.
*Relevant evidence is admissible unless another rule or
exclusion provides otherwise.
Rule 403 Exclusions – The court may EXCLUDE
relevant evidence if its probative value is substantially
outweighed by a danger of:
a) unfair prejudice;
b) confusing the issues;
c) misleading the jury;
d) undue delay;
e) wasting time; OR
f) being needlessly cumulative.
B.
M
M
M
Policy Exclusions
Subsequent Remedial Measures – such evidence is
NOT admissible to prove:
a) negligence;
b) culpable conduct;
c) a defect in a product or design; OR
d) a need for a warning or instruction.
*BUT, such evidence may be admitted for other
purposes (impeachment, control, ownership, feasibility).
Compromise/Settlement Offers & Negotiations –
Statements and offers made during settlement
negotiations are NOT admissible to:
a) prove the validity or amount of a disputed claim;
OR
b) impeach by a prior inconsistent statement.
Pleas & Plea Negotiations
The following are NOT admissible in a subsequent civil
or criminal case:
a) statements made during plea discussions;
b) a nolo contendere plea (D doesn’t admit or
dispute the charge); OR
c) a guilty plea that is later withdrawn.
M
Paying or Offering to Pay Medical Expenses
NOT admissible to prove liability, BUT any related
statements or factual admissions are admissible.
M
Liability Insurance
NOT admissible to prove culpability, BUT admissible for
other purposes (i.e. ownership, control, agency).
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Physical & Documentary Evidence
D.
H
Character Evidence & Related Concepts
Character Evidence – Generally, character evidence is
NOT admissible to prove propensity (that a person acted
in conformity with a character trait on a particular
occasion).
− BUT, character evidence is generally ALLOWED
for non-propensity purposes (i.e. when character
is an ultimate issue in the case → defamation).
See below for specific rules when Character Evidence
MAY be offered as circumstantial evidence to prove
propensity.
CRIMINAL CASES
D’s character:
− D can ALWAYS offer evidence of his own
character.
− Prosecution is NOT allowed to prove D acted in
accordance with D’s character trait unless D
opens the door.
Victim’s character (not involving rape):
− D can offer reputation and opinion evidence to
show victim’s character to show D’s innocence.
− If D presents evidence of victim’s character,
Prosecution can offer evidence of: (a) victim’s
good character (for the same trait); or (b) D’s
bad character (for the same trait).
1
09
EVIDENCE
Victim’s character (homicide case):
− Prosecution can show victim’s peacefulness
only if D claims victim was the aggressor (selfdefense).
E.
M
Victim’s character (involving rape / sex offenses):
− Generally, NOT admissible to prove victim’s
sexual behavior/predisposition.
− EXCEPTIONS → court may admit evidence: (a)
if offered to prove D was not involved in the sex
crime; (b) of sexual relations between D and
victim to prove consent (but, Prosecutor may
offer such evidence for any reason); OR (c) if its
exclusion violates D’s constitutional rights.
M
Victim’s character (alleged sexual misconduct):
− Victim’s sexual behavior/predisposition is
admissible if its probative value substantially
outweighs the danger of (1) harm to any victim,
AND (2) unfair prejudice to any party.
− Victim’s reputation is admissible ONLY IF the
victim has placed it in controversy.
Other Misdemeanors → NOT admissible to impeach.
Felonies that DO NOT involve Dishonesty:
− Civil & Criminal Cases → Admissible if witness
is not the Defendant (subject to Rule 403
exclusions).
− Criminal Cases (only) → Admissible if D is the
witness but only if the probative value outweighs
any prejudicial effect.
Prior Bad Acts (crimes, wrongs, acts) – Generally NOT
admissible to show propensity.
10-Year Exception → If 10-years have passed (from
conviction or release from jail – whichever is later), the
conviction is NOT admissible unless:
1) its probative value outweighs its prejudicial
effect; AND
2) the proponent provides reasonable written
notice to the adverse party.
Is admissible for non-propensity purposes → Motive,
Identity, Absence of Mistake/Accident, Intent, Common
Plan or Scheme, Opportunity, or Preparation.
To offer such evidence, the proponent MUST show that:
1) the prior act was committed (by a
preponderance of evidence); AND
2) the probative value substantially outweighs
the danger of unfair prejudice.
H
Habit / Routine Practice – Admissible to show that a
person (or organization) acted in accordance with their
habit or routine practice.
− Habit = a regular response to a repeated
situation.
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Prior Convictions – evidence of prior convictions may
be admitted in certain instances.
Prior Felony / Misdemeanor involving Dishonesty →
ALWAYS admissible to impeach.
Methods of Proving Character:
− Direct examination → opinion, reputation
− Cross-examination → opinion, reputation,
specific acts.
Sexual Assault / Child Molestation Exception – prior
bad acts of sex crimes are ADMISSIBLE if D is accused
of such conduct.
Prior Inconsistent Statements – Admissible to
impeach a witness.
− Need not show/disclose contents of the
statement to the witness during examination,
BUT must show it to an adverse party’s attorney
upon request.
Extrinsic Evidence is admissible ONLY IF:
1) Relevant to a material issue at trial (one other
than the witness’s credibility); AND
2) Proper foundation is shown (witness is first
given an opportunity to explain or deny the
statement and an adverse party is given an
opportunity to examine the witness about it).
*The above requirements DO NOT apply when extrinsic
evidence is offered against a party opponent.
CIVIL CASES
General Rule – Character evidence to prove propensity
is generally NOT admissible in a civil case.
− BUT, see sexual misconduct exception below.
M
Impeachment
Pardon / Annulled Exception → Evidence of a
conviction is NOT admissible if it’s been pardoned or
annulled based on a finding of innocence.
H
Specific Instances of Conduct – A witness’s credibility
may be attacked on cross-examination with specific
instances of conduct (prior bad acts) ONLY IF the
conduct is probative of the witness’s character for
truthfulness or untruthfulness.
− Extrinsic evidence is NEVER admissible to
attack or support such instances of a witness’s
credibility.
2
09
M
EVIDENCE
Character for Truthfulness – A witness’s credibility
may be attacked or supported by:
a) Reputation testimony about the witness’s
character for truthfulness / untruthfulness; OR
b) Opinion testimony.
*BUT, evidence of the witness’s truthful character is
admissible ONLY AFTER ATTACKED.
M
Ability to Observe, Remember, or Relate Facts – A
witness’s ability to observe, remember, or relate facts
accurately may be attacked on impeachment.
− Extrinsic evidence is admissible for this purpose.
M
Hearsay Declarants – May be attacked (and then
supported) by any evidence that would be admissible if
the declarant had testified as a witness.
− Evidence (including hearsay) is admissible to
impeach regardless of when / whether declarant
had an opportunity to explain or deny it.
F.
H
Refreshing Recollection – Refreshing a witness’s
recollection using a document is permitted when the
witness:
1) once had personal knowledge of the matter, but
2) is unable to recall it while testifying.
Judicial Notice – A court may take judicial notice of
indisputable facts:
a) commonly known in the community; OR
b) readily capable of verification and that cannot be
reasonably questioned.
Civil Cases → court must instruct jury to accept the
noticed fact as conclusive (the fact is dispositive).
Criminal Cases → court must instruct jury that it may or
may not accept the noticed fact as conclusive.
H
M
Expert Witness Testimony – Expert testimony is
permitted when:
1) witness is qualified as an expert;
2) opinion is helpful to the jury;
3) witness believes in the opinion to a reasonable
degree of certainty;
4) opinion is supported by sufficient facts or data;
AND
5) opinion is based on reliable principles and
methods that were reliably applied.
Reliability → is based on (1) publication and peer review,
(2) error rate, (3) testability, AND (4) if it’s generally
accepted in the field.
Presentation of Evidence
Only the opposing party may offer into evidence the item
used to refresh (unless it’s admissible on other grounds).
M
Lay witness may offer an opinion ONLY IF it’s:
1) rationally based on perception;
2) helpful to clearly understand the testimony or
determine a fact (not a legal conclusion); AND
3) not based on scientific, technical, or other
specialized knowledge.
Lay Witness Testimony – is any person who gives
testimony in a case that is not called as an expert.
Testimony is admissible if the witness:
1) is competent to testify (competency is
presumed unless rebutted); AND
2) has personal knowledge of the matter.
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G.
H
Hearsay
Hearsay & Non-Hearsay
Hearsay is an (1) out of court statement, (2) that is
offered to prove the truth of the matter asserted.
− Admissible ONLY IF it falls under an exception
or exclusion.
Statement = a person’s oral or written assertion.
− A nonverbal act is a statement if it’s intended as
an assertion.
Multiple Hearsay – each level of hearsay MUST fall
within an exception or exclusion to be admissible.
Non-Hearsay – If a statement is offered to prove
something other than the truth of the statement, it’s not
hearsay and is ADMISSIBLE.
Common Non-Hearsay Statements:
1) Verbal acts of independent legal significance.
2) To show the effect on the listener.
3) Prior inconsistent statement used to impeach.
4) Circumstantial evidence of the speaker’s state of
mind.
3
09
EVIDENCE
HEARSAY EXCLUSIONS
H
H
Statements by a Party Opponent – A statement by a
party opponent is:
1) Any statement offered against an opposing
party, AND
2) That is:
a) made by the party (or their
representative);
b) adopted or believed to be true by the
party (silence may be sufficient);
c) made by an authorized person;
d) made by an agent/employee of the
party acting within their scope; OR
e) made by a co-conspirator.
Prior Statements by a Witness – A prior statement by
a declarant-witness is deemed non-hearsay if:
1) Declarant testifies;
2) Declarant is subject to cross-examination
about the prior statement; AND
3) The prior statement:
a) was inconsistent with prior-testimony
and given under oath in a prior court
proceeding or deposition;
b) declarant identifies a person as
someone they perceived earlier; OR
c) is consistent with prior testimony and is
offered to either (i) rebut that the
declarant is lying, or (ii) to rehabilitate
declarant’s credibility.
H
Statements Made for Medical Diagnosis/Treatment –
Not excluded by the hearsay rule when the statement:
1) is made for (and reasonably pertinent to)
medical diagnosis or treatment; AND
2) describes medical history or symptoms (past or
present).
*Statements that are not relevant to medical diagnosis or
treatment DO NOT fall within this hearsay exception.
M
Statements of Mental, Emotional, or Physical
Condition – Admissible when the statement is of
declarant’s:
a) then-existing state of mind (motive, intent, or
plan); OR
b) emotional, sensory, or physical condition.
*BUT, statements of memory or belief are NOT
admissible unless it relates to the validity or terms of the
declarant’s will.
M
Dying Declaration – Elements to be admissible:
1) Declarant is unavailable;
2) Statement made under a sense of impending
death; AND
3) Statement was about the circumstances or
cause that put the declarant in the position of
impending death.
*ONLY ALLOWED in civil cases and criminal homicide
cases.
Declarant Unavailable Requirement – deemed
unavailable if the witness:
a) is exempt due to privilege;
b) refuses to testify despite a court order;
c) does not remember;
d) cannot be present because of death or illness;
OR
e) is beyond the reach of a court’s subpoena
and cannot be procured by reasonable means.
HEARSAY EXCEPTIONS
H
Present Sense Impression – Is a statement describing
an event made by the declarant:
a) while observing the event; OR
b) immediately thereafter.
*A few minutes after the event is ok.
H
Excited Utterance – Is a statement relating to:
1) a startling event or condition,
2) made while the declarant was under the stress
of excitement that the event/condition caused.
*A slight delay between the event and statement is ok.
H
Business Records – Admissible if it’s: (1) a record of
events, conditions, opinions, diagnoses, (2) kept in the
regular course of business, (3) made at or near the time
of the matter described, (4) made by a person with
knowledge, (5) is the regular practice of the business,
AND (6) the opponent party does not show a lack of
trustworthiness.
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M
Statement Against Interest – A statement against
one’s own penal, proprietary, or pecuniary interest is
ADMISSIBLE when the declarant is unavailable.
− Criminal cases → it must be supported by
corroborating circumstances that clearly indicate
its trustworthiness.
M
Public Records – The following records are admissible:
a) a record describing policies and practices of a
public office;
b) observations made by someone in accordance
with his duties by law (but excludes police
reports in criminal case); OR
c) factual findings from a legally authorized
investigation (but only in civil cases or against
the government in a criminal case).
4
09
EVIDENCE
*BUT, such records will NOT be admitted if the opponent
party shows a lack of trustworthiness.
M
*Spousal immunity DOES NOT apply in civil cases.
Confidential Marital Communications –
Communications between spouses are privileged if:
1) made during the course of a valid marriage;
AND
2) were intended to be confidential.
*Either spouse may assert the privilege, and it applies
after divorce.
*Privilege applies in BOTH civil and criminal cases.
Past Recollection Recorded – Is a record made on a
matter the witness once knew about, but now cannot
recall well enough to testify fully and accurately.
Is admissible if:
1) witness had personal knowledge at one time;
2) writing was made or adopted by the witness;
3) it was made while the event was still fresh in the
witness’s mind;
4) is accurate; AND
5) witness can no longer remember the event.
*The record may be read into evidence, BUT it can only
be received as an exhibit if offered by an adverse party.
Spousal Privileges DO NOT apply:
a) in cases between the spouses; OR
b) when a spouse commits a crime against the
other spouse or their children.
M
HEARSAY & 6TH AMENDMENT RIGHTS
H
Right to Confront Witnesses (6th Amend.) – The
Confrontation Clause gives a criminal defendant the right
to confront witnesses against him.
The client holds the privilege and may waive it by
disclosing info to a third-party (but it’s not waived
through inadvertent disclosure).
The use of an out-of-court statement (even if within a
hearsay exception) violates the 6th Amend. when:
1) The statement is testimonial;
2) Declarant is unavailable to be cross-examined
at trial; AND
3) D did not have an opportunity to crossexamine the declarant before trial.
Testimonial = Statements made to:
a) Grand juries; OR
b) The police whose primary purpose (when
viewed objectively) was to collect testimony to
be used at a later trial.
*A statement to assist the police in an ongoing
emergency is NOT testimonial.
Ongoing Emergency – Existence of an ongoing
emergency determined by: (1) nature of the dispute; (2)
potential harm to the victim; (3) threat to additional
identifiable victims; (4) generalized threat to the public;
(5) type of weapon; and (6) whether suspect is at large
or located, but not apprehended.
H.
M
Privileges
Spousal Privileges
Spousal Immunity – A witness-spouse in a valid
marriage MAY refuse to testify against their spouse
in a criminal case.
− Only the witness-spouse holds this privilege –
but privilege ends after divorce.
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Attorney-Client Privilege – Protects confidential
communications between and attorney and client if:
1) intended to be confidential; AND
2) made to facilitate legal services.
Attorney-Client Privilege DOES NOT apply when:
a) legal services are sought to further a crime or
fraud;
b) a litigation is related to a breach of duty between
the attorney and client; OR
c) joint clients are later involved in civil litigation
against each other.
M
Attorney Work Product Doctrine – Protects from
disclosure all materials prepared by an attorney (or his
agents) in anticipation of or during litigation.
− Exception → If a party shows: (1) a substantial
need exists; AND (2) a substantial equivalent
cannot be obtained without undue hardship.
M
Physician-Patient Privilege
Most States → recognize the privilege if (1) it’s a
confidential patient communication, (2) made to a
physician, (3) for the purpose of medical diagnosis or
treatment.
− The patient holds the privilege, BUT it may be
waived when a medical condition is placed in
issue (i.e. personal injury lawsuit).
Federal Courts → DO NOT recognize the privilege.
− However, state law governs privilege for civil
cases in federal court on a claim/defense when
state law supplies the rule of decision.
5
09
M
EVIDENCE
Psychotherapist-Patient Privilege – ALL states
recognize the privilege, which protects:
1) confidential patient communications,
2) made to a psychotherapist (psychologist,
psychiatrist, or social worker),
3) for the purpose of psychological treatment.
*The patient holds the privilege and may waive it.
Exceptions – include:
▪ Court-ordered examinations.
▪ Civil commitment proceedings to determine if
hospitalization is required.
▪ When the condition is placed “in issue” by the
patient.
▪ The dangerous-patient exception – the
therapist has a duty to warn when he knows (or
should know) that the patient poses a serious
threat of violence to foreseeable victims.
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6
10
FAMILY LAW
Uniform Premarital Agreement Act (UPAA) –
Agreement must be:
1) in writing; AND
2) signed by both parties.
*No consideration is required.
Definitions
UMDA = Uniform Marriage and Divorce Act
UPAA = Uniform Premarital Agreement Act
UIFSA = Uniform Interstate Family Support Act
PKPA = Parental Kidnapping Prevention Act
UCCJEA = Uniform Child Custody Jurisdiction and
Enforcement Act
A.
L
Getting Married
Marriage Requirements – A valid marriage requires:
1) consent from both parties;
2) a marriage license; AND
3) a ceremony (solemnized by a judicial officer or
church).
Consent – Depends on the jurisdiction.
− Some States → if the parties participate in a
ceremony AND sought some benefits of
marriage.
− Other States → if parties consented to the
obligations of marriage.
H
NOT Enforceable under UPAA if:
a) Involuntarily (fraud, duress, coercion); OR
b) Unconscionable when executed AND before
execution the spouse was: (i) not provided fair
disclosure (of property/financial obligations); (ii)
did not waive disclosure in writing; or (iii) did not
have (or could have) knowledge of such
information.
Common Law Marriage – Requires that the spouses:
1) live together for a specified amount of time;
2) be legally able to marry;
3) have a present agreement that they are married;
AND
4) hold themselves out as being married.
Involuntarily Factors → Courts consider: (1) presence of
independent legal counsel; (2) length of time between
agreement and wedding; (3) ability to understand the
agreement; and (4) other reasons for proceeding with
the marriage (i.e. pregnancy).
H
Child Custody & Support – NOT binding on a court,
and any provision that adversely affects a child’s right to
support is unenforceable.
− If an agreement is NOT in the child’s best
interests, a court may order a parent to pay an
amount reasonable or necessary for the child’s
support.
M
Spousal Support
UPAA → Permitted, but not enforceable if it makes the
spouse eligible for public support (welfare).
− Court may order support to the extent necessary
to avoid eligibility.
Some States → Invalid as against public policy.
L
Eliminating Fundamental Marital Duties & Allocating
Financial Responsibility – Spouses may agree on any
matter that is not in violation of (a) public policy, or (b)
criminal law.
− May allocate financial responsibilities, but it’s
NOT binding on third-parties.
− Agreements that limit spousal support during
marriage → generally void as against public
policy.
A valid Common Law Marriage creates rights/obligations
identical to a ceremonial marriage.
− Most states will honor a Common Law Marriage
validly obtained in another state.
M
Bigamous Marriage – A person CANNOT be married to
more than one person at the same time.
− A marriage is NOT valid if entered into when one
of the parties is still married (before the
dissolution of an earlier marriage).
BUT, a marriage may be saved under:
a) Equity Doctrine → creates a strong
presumption that the most recent marriage is
valid (rebuttable if evidence shows first marriage
was not dissolved).
b) UMDA → marriage may be validated upon
removal of impediment (i.e. earlier marriage is
terminated).
B.
H
Premarital Agreements
Enforceability – Premarital agreements are enforceable
unless procured by fraud, duress, or coercion.
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C.
Being Married
L
Married Women’s Property Acts – Women retain full
rights to their property after marriage.
L
Mutual Support – All states recognize a marital duty of
support between spouses.
− But, the Doctrine of Nonintervention DOES
NOT allow a court to intervene in an ongoing
1
10
FAMILY LAW
5) No Other State Jurisdiction → when no other
state has jurisdiction.
intact marriage to resolve internal disputes about
family support, finances, and expenditures.
M
Payment for Necessities – A spouse is liable to
creditors who have provided necessities (food, clothing,
shelter) to the other spouse.
− Medical Expenses → deemed necessities in
some states (a non-debtor spouse may be liable
to the extent the debtor spouse is unable to
pay).
PKPA (Parental Kidnapping Prevention Act) –
Generally the same as UCCJEA.
Adoption Matters – Same as UCCJEA in most states.
E.
L
D.
H
Jurisdiction & Recognition of Decrees
Jurisdiction in Marital / Divorce Actions – State
courts have subject matter jurisdiction.
Ex Parte Divorce → may be maintained without
personal jurisdiction over the absentee spouse ONLY IF
plaintiff-spouse is domiciliary of the rendering state.
− Many States have durational residency
requirements.
Divisible Divorce → one spouse can terminate the
marriage (ex parte divorce) in one proceeding, and
reserve other issues for a later proceeding.
H
Uniform Child Custody Jurisdiction & Enforcement
Act (UCCJEA) – A court may decide child custody
ONLY IF it has:
1) Home State Jurisdiction → (a) child’s home state
OR (b) where child lived with a parent for 6+
months immediately before action was filed,
child is absent from state, and parent or acting
parent is still present in the state.
2) Significant Connection Jurisdiction → (1) no
home state, (2) child and at least one parent
have a significant connection to the state, AND
(3) substantial evidence in the state exists.
3) More Appropriate Forum Jurisdiction → all other
courts decline to exercise jurisdiction because
this particular court is a more appropriate forum.
4) Emergency Jurisdiction → child is physically
present in the state AND child is abandoned or
it’s an emergency to protect the child.
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Annulment – Invalidates a marriage.
Grounds:
a) Lack of capacity (fraud, duress, mental
incapacity);
b) Bigamy;
c) Consanguinity (marriage between close family
members); OR
d) Underage at the time of marriage (voidable by
the underage spouse).
Fraud → exists when:
1) a spouse made a misrepresentation prior to
the marriage on an essential and vital part of
the marriage (sex, procreation); AND
2) the marriage would not been consented to if
the other spouse had been made aware.
*Waived if a spouse continues to cohabitate after
discovering the facts underlying the fraud.
Economic or Child Custody/Support Issues → court
MUST have personal jurisdiction over the defendantspouse.
Child Custody & Adoption Matters – Court MUST
have subject matter jurisdiction to issue or modify a child
custody order.
− Personal jurisdiction or physical presence of a
party or child is NOT necessary.
Divorce, Annulment, Separation, & Dissolution
Fraud is usually NOT granted for misrepresentations
concerning character or financial situation.
M
Divorce – Five grounds:
1) Cruel and inhuman treatment
2) Adultery
3) Abandonment for a set amount of time
4) Habitual drunkenness or drug addiction
5) No-fault divorce (irretrievable breakdown of the
relationship for a set amount of time)
M
Setting Aside Divorce / Separation Agreements
Divorce Settlement Agreement → may be set aside if:
1) substantially unfair; AND
2) a result of fraud or mediator misconduct.
Separation Agreement → Invalid if:
a) unconscionable; OR
b) was the result of fraud.
F.
H
Division of Property
Division of Property
Equitable Division Approach (most states) → marital
assets are divided among the spouses by equitable
distribution; separate property is NOT divided.
2
10
FAMILY LAW
−
Separate Property includes:
1) Property acquired before marriage;
2) Gifts and bequests (even if during marriage);
3) Property that spouses agreed will be separate
property; and
4) Passive appreciation of assets – an increase in
value due to a passage of time.
When Awarded under UMDA – only awarded if the
spouse:
1) Lacks sufficient property; AND
2) Is unable to support him/herself through
employment or is the custodian of a child with a
condition where the spouse cannot seek
employment.
Marital Property = ALL OTHER property acquired
during the marriage, including: (1) active appreciation –
caused by the effort of a spouse; and (2) future
expectancies, even if payment will not be received until
after the marriage ends.
Determining the Amount – Relevant factors a court will
consider → (1) financial resources; (2) time necessary
for obtaining a job; (3) standard of living during marriage;
(4) duration of marriage; (5) age and physical/emotional
condition; and (6) the ability of the spouse paying
support.
− A minority of states will also consider marital
misconduct or fault.
Distribution of Marital Property – All marital property is
pooled, and then divided among the spouses. The
court considers various factors to determine distribution
amounts.
− Factors → duration of marriage, age of spouses,
earning capacity, lifestyle, income, separate
property of each spouse.
M
M
Termination – Spousal support obligations terminate
upon the death of obligor spouse.
Accrual of Marital Property:
− Some States → ends upon permanent
separation.
− Other States → ends upon a final divorce
decree.
L
Reinstatement of a Prior Award
Most Courts → “No-Revival” Approach – no
reinstatement of a prior award that was terminated.
Some Courts → “Logic of Annulment” Doctrine – will
order reinstatement of a prior alimony award.
Professional Degree / License
Most States → NOT marital property, but allowed
reimbursement for any support provided to a spouse to
obtain the degree/license.
Minority View → IS marital property – value is based on
potential future earnings.
H
Modification – same as child support (see below)
Marital & Economic Fault – fault of either party (i.e.
adultery) is generally irrelevant in determining
distribution of marital property.
− BUT, economic misconduct (i.e. dissipation of
assets) is considered.
L
No-Termination Upon Death – A property division
award DOES NOT terminate upon the death of the
obligor-spouse.
− Obligations may be enforced against the estate.
M
Modification of a Property Division Award – A
property division award can be modified ONLY IF
exceptional circumstances exist (i.e. fraud, duress).
G.
H
Also known as Maintenance or Alimony.
H.
H
Child Support
Child Support
Parent’s Legal Obligation – A biological parent is
legally obligated to pay child support (whether or not the
child was intended or wanted).
Child Support Guidelines – Federal law requires
States to set guidelines that:
1) take into account all earnings and income of the
non-custodial parent; AND
2) are based on specific descriptive and numeric
criteria.
College / Educational Expenses – Some states require
support for college/continuing education.
− But, a child may lose the right to payments if the
child does not follow the obligor-parent’s
reasonable instructions.
Spousal Support
Spousal Support – purpose is to maintain a spouse’s
standard of living and limit any unfair economic effects of
a divorce.
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Termination Upon Death
− Most States → Child support obligations
terminate upon death, but the deceased’s estate
remains liable for past due payments.
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10
FAMILY LAW
−
H
Some States → Obligation DOES NOT
terminate. Allows access to the deceased’s
estate to fulfill future payments.
A court CANNOT award/deprive custody based on a
parent’s lifestyle, values, or religious beliefs.
− BUT, it may take into account if such behavior or
conduct endangers the child.
− A parent’s sexual behavior (by itself) CANNOT
be used to deny custody.
Modification & Enforcement of Support Orders
Most States → A support order can only be modified
when there is a substantial change in circumstances
making the prior order unreasonable.
H
Uniform Marriage & Divorce Act (UMDA) → A support
order can only be modified upon a showing of changed
circumstances so substantial and continuing as to
make the terms unconscionable.
Some courts will NOT permit a modification if the change
was anticipated or voluntary. Other courts will permit a
modification if the spouse acted in good faith.
A court will only grant custody to a third-party upon a
showing of special circumstances → abuse, neglect,
abandonment, mentally incompetent, or parent
surrendered the child.
Courts CANNOT retroactively modify support orders.
Uniform Interstate Family Support Act (UIFSA) –
Courts MUST give full faith and credit to support orders
from other states.
Under UIFSA, a court CANNOT modify a child support
order of another state unless:
1) The court has jurisdiction to issue an order; AND
2) Either:
a) all parties do not reside in the issuing state
(obligor, obligee, child), or
b) each party has consented in writing to
jurisdiction in another state.
L
Joint Custody – will be granted only for parents who
can cooperate.
L
Presumption of Parental Fitness – Parents are
presumed fit to care for their children.
− May be rebutted by clear and convincing
evidence of conduct endangering the child
(abuse, neglect, abandonment, mental
incompetence).
L
Parental Visitation Rights – Parents not granted
custody are entitled to reasonable visitation rights.
− UNLESS the court finds (after a hearing) that
visitation would seriously endanger the child’s
physical, mental, moral, or emotional health.
An Issuing State has continuing, exclusive jurisdiction
over an order if:
a) the State is still the residence of one party; OR
b) all parties consent in a record or in open court.
I.
H
Visitation rights may be modified by the court if it serves
the best interests of the child.
Child Custody & Visitation
Best Interests of the Child Standard – Courts
determine child custody based on the best interests of
the child.
− Gives great discretion to the court.
− Courts will evaluate various factors → the
wishes of the parents and mature children; age,
financials, health of each parent; new partners in
each parent’s life; effect custody will have on a
child’s relationship with extended family; history
of domestic violence; stability of home and
school environment; and any other relevant
factor.
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Parent vs. Third-Party Custody – A fit legal parent is
given preference, and it’s presumed that such custody is
in the best interests of the child.
− In some States, this presumption may be
rebutted if detrimental to the child.
− The court MUST give great weight to a parent’s
determination of what’s best for the child (as
parental rights are Constitutionally protected).
Payment of child support is independent from the right to
visitation – interference with visitation DOES NOT
suspend the obligation to pay child support.
M
Third-Party Visitation Rights – A court MUST give
great weight to parent’s choice of what is best for the
child.
− Parental rights are Constitutionally protected.
Some States permit visitation to third-parties who have
a substantial relationship with the child (a de-facto
parent) when in the best interests of the child.
− BUT, the third-party must: (1) overcome a
presumption that the parent is acting in the best
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FAMILY LAW
iii. Quantum Meruit – one party is unjustly
enriched by the services provided by
another.
*Either party may bring an action to partition jointly held
property.
interests of the child; AND (2) show that a denial
of visitation poses a risk of harm to the child.
L
M
Relocation – A court will permit a custodial parent to
relocate with the child if:
1) made in good faith; AND
2) it’s in the best interests of the child.
*The court will balance the effect on visitation vs. the
benefits of relocation.
H
Agreements Between Cohabitants – An agreement for
division of property between unmarried cohabitants may
be express or implied.
− Express (oral or written) → is enforceable except
if based on sexual relations.
− Implied → court may find an implied-in-fact
agreement if the parties comingled funds during
the relationship.
L
Putative Spouse Doctrine – Protects the financial and
property interests of a person who:
1) Entered into a void/voidable marriage; AND
2) Believed in good faith (objective standard) that
the marriage was valid.
*A putative spouse is entitled to the same marital
property rights as a legal spouse.
Modification of a Child Custody Order – Allowed
ONLY IF there is a substantial change in
circumstances.
− Custody determinations CANNOT be
retroactively modified.
The court that had jurisdiction over the original order
usually retains continuous and exclusive jurisdiction
to make modifications.
− But see exceptions below under PKPA and
UCCJEA.
PKPA → A court may modify an order from another
State if:
1) it had jurisdiction to make an initial
determination; AND
2) the issuing State (a) no longer has jurisdiction,
or (b) declined to exercise it.
K.
H
Paternity – May be established by:
a) Birth certificate;
b) Legal presumption;
• A child born during marriage is
presumed to be the marital child of the
husband (may be rebutted).
c) When unmarried parents voluntarily sign an
acknowledgement of paternity;
d) An unmarried biological father’s successful
challenge of a presumption;
e) Paternity suit; AND/OR
f) Paternity by estoppel – held himself out as the
father and paid support (assuming parental
responsibilities).
*If paternity is established, that person is responsible for
child support obligations.
M
Unmarried Biological Father’s Rights
UCCJEA → A court may modify an order from another
State if:
1) It had jurisdiction to issue an initial order; AND
2) Either:
a) the Issuing State determines it no longer
has jurisdiction;
b) the Issuing State determines that the
Current State is more appropriate; or
c) the court determines that all parties do
not reside in the Issuing State.
J.
M
Rights of Unmarried Cohabitants
Division of Property
The party who has title retains sole ownership of the
property UNLESS:
a) Agreement Between Cohabitants (may be
express or implied); OR
b) Equitable Remedy Theory (3 types).
i. Resulting Trust – title in one party’s name,
but another party gave money to acquire
the property with intent to have ownership.
ii. Constructive Trust – one party obtained title
through wrongful conduct.
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Unmarried Parents & Their Children
Protected under the Due Process Clause only if:
1) Father assumed parental responsibilities; AND
2) Established a substantial parent-child
relationship.
Entitled to notice of adoption if:
a) his right is protected under the Due Process
Clause; OR
b) He acted consistent with the State’s guidelines
for the putative father registry.
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10
FAMILY LAW
L.
M
Parent, Child, & State
Right to Control Child’s Upbringing – Is a
fundamental right, and the govt. generally CANNOT
interfere.
−
Exceptions – The govt. MAY LIMIT parental rights &
decisions when it:
a) jeopardizes the health or safety of the child (e.g.
lifesaving medical treatment is needed); OR
b) has a potential for a significant social burden
(e.g. spread of a preventable contagious illness).
Education → A parent may provide religious education
or deny education because of religious beliefs.
− But, ALL children must attend school at least
through the 8th grade.
Medical Care → Parental consent is required before
medical care is performed on a minor, except in an
emergency or where prescribed by statute.
− Some states DO NOT honor a parent’s refusal
of child medical treatment based on religious
beliefs. Courts consider whether strong facts in
favor of treatment exist, and weigh the
risks/benefits of the treatment.
Consent for adoption CANNOT be withdrawn after the
adoption decree is entered.
− BUT, consent may be withdrawn prior to the
adoption decree if in the best interests of the
child.
H
Jurisdiction – Same as a child custody determination
under UCCJEA.
L
Visitation for Biological Parents
Most States → Biological parents lose visitation rights
after adoption.
Some States → Permitted if in the best interests of the
child.
N.
M
Vaccination Mandate → Is within the State’s police
power. Requiring vaccinations as a condition for school
admission does not violate the Constitution.
L
L
H
The husband is presumed to be the legal father of the
child if:
1) he consented in writing; AND
2) a medical doctor performed the procedure.
*A sperm donor’s rights are severed (unless the donor is
also the husband).
Adoption
Consent to Adoption – BOTH parents’ consent is
generally required.
− Non-Marital Child → Father’s consent is only
required when he assumed parental
responsibilities (i.e. interaction with mother
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Artificial Insemination & In Vitro Fertilization
In Vitro Fertilization – Fertilization by combining egg
and sperm in a laboratory, and then transferring it into
the female’s uterus.
Loss of Consortium Clams – Intended to compensate
a spouse for loss of the other spouse’s companionship,
sexual relations, and affection.
− Only available to married couples.
Adoption – Severs the biological parent’s legal rights
and responsibilities for the child.
− Some States → Inheritance rights of the child
are NOT terminated if adopted by a blood
relative.
Alternatives to Adoption
Artificial Insemination – Is the introduction of sperm
into a female’s uterus for achieving pregnancy by means
other than sexual intercourse.
Intrafamily Lawsuits & Tort Immunity
Common Law → Spouses could not sue each other,
and parent-child suits were not allowed.
Modern View → Intrafamily immunity is abolished.
M.
during pregnancy, paid for expenses,
willingness/ability to assume custody and care of
child).
Consent of a parent is NOT required when the
parent → (a) has surrendered the child to an
adoption agency; (b) is incompetent due to
mental illness; (c) abandoned the child; OR (d)
permanently neglected the child.
L
Surrogacy Arrangements – When a woman agrees to
carry a pregnancy for another person/couple who will
become the child’s parents.
− States that Allow Surrogacy Agreements →
Courts will only enforce the agreement under
certain conditions, such as prior court approval
of the surrogacy agreement.
− Some States → Surrogacy is NOT allowed, and
the agreement is void as against public policy.
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11
REAL PROPERTY
A.
Present & Future Estates
M
Connect the Present Estate to the applicable Future
Interest (except when absolute ownership is conveyed).
PRESENT ESTATES
M
M
M
Fee Simple Absolute – a conveyance of absolute
ownership of real property (no conditions placed on it).
− It’s freely devisable, descendible, and alienable.
Fee Tail – a conveyance of real property to a person
AND their heirs.
− Abolished in most jurisdictions; is treated as a
fee simple absolute.
Fee Simple Defeasible (3 types) – a conveyance of real
property with conditions.
− Created with express conditional language.
− Ownership may be terminated upon the
occurrence/non-occurrence of an event or
condition.
Fee Simple Determinable → reserves a future interest
in the grantor (possibility of reverter).
− Created with words of duration (i.e. so long as,
during, while).
− Conveyance is automatically terminated if the
specific condition occurs.
Fee Simple Subject to a Condition Subsequent →
reserves a future interest in the grantor (right of reentry).
− Created when a conveyance is subject to
grantor’s right of re-entry if a specific condition
occurs.
− Only terminates if grantor affirmatively exercises
his right of re-entry.
FUTURE ESTATES
M
Possibility of Reverter – if the condition occurs,
grantee’s interest is automatically terminated and vests
in the grantor.
M
Right of Re-entry – upon the occurrence of a specified
condition, the grantor MAY re-enter and take the
property.
− The grantor MUST exercise the right to
terminate the interest.
M
Vested Remainder – is a future interest in land given to
an identifiable person with no conditions.
M
Contingent Remainder – is a future interest in land
conditioned upon the occurrence or non-occurrence of a
specific event.
M
Life Estate (Remainderman) – upon the life-tenant’s
death, ownership of the property transfers to a specified
person.
− Remainderman = person(s) who receive the
property upon the life-tenant’s death.
B.
M
Fee Simple Subject to Executory Interest → reserves
a future interest in a third-party (not the grantor or his
heirs).
− Example → “To person X, so long as (or “but if”)
… to person Y.”
M
Life Estate – a conveyance where the life tenant is
entitled to possession during their lifetime, and upon
death the real property transfers to another party
(specified by deed).
− The life-tenant is responsible for ordinary
expenses and taxes for the property during their
lifetime.
− Life-tenant CANNOT commit waste (causing the
property to decrease in value).
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Statute of Limitations
− Interest in Fee Simple Determinable/Subject to
Condition Subsequent lasts through the
applicable statute of limitations (SOL) period.
− An action for possession may be brought
anytime within the SOL period (a set number of
years after the action accrued).
Co-Tenancy
Tenancy in Common – the default estate created when
land is conveyed to two or more people UNLESS:
a) Express language states that the parties have a
survivorship right (creating a joint tenancy); OR
b) If conveyed “as husband and wife” (creating a
tenancy by entirety).
*Some States → Tenancy by the Entirety is created by
default if the conveyance is to a married couple.
Each owner owns an undivided interest in the property,
and has the right to use and enjoy the ENTIRE property.
− Interest passes by bequest or intestacy.
M
Joint Tenancy: Creation – created when 4 unities are
present → Unity of (1) time, (2) title (same instrument),
(3) interest, AND (4) possession.
− MUST have clear express intent to create a
Joint Tenancy with a right of survivorship
(i.e. deed states “as joint tenants”, “right of
survivorship”).
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M
REAL PROPERTY
Joint Tenancy: Severance – When one joint tenant
unilaterally transfers his ownership interest in the
property, the joint tenancy is severed. Tenants then hold
the property as tenants in common.
− If there are more than two joint tenants, the joint
tenancy remains, but only among the other joint
tenants.
−
M
If a joint tenant takes out a mortgage on her interest:
− Title Theory Jurisdiction → severs joint tenancy
− Lien Theory Jurisdiction → does not sever
M
M
Rent from Third-Party → Co-tenant is entitled to a fair
share of rent received from a third-party.
Improvements → Co-tenant is NOT entitled to
reimbursement for improvements to the property (unless
otherwise agreed).
– BUT, the improving co-tenant is entitled to the
downside risk or upside gain when the property
is sold.
Duration:
− Modern View → month-to-month tenancy is
created.
− Common Law → term is equal to original
tenancy period.
M
H
Landlord & Tenant Issues
Types of Leasehold Interests – A lease grants a tenant
the present possessory interest in real property for a
limited period of time.
3 Types:
(1) Tenancy for Years – lasts for a fixed period of time;
automatically terminated after the period ends.
(2) Periodic Tenancy – continues for a specific period
(weekly/monthly) until terminated by proper notice.
− Is created by: (a) express agreement; (b)
implication if rent is paid at specific periods; OR
(c) law (when a tenant-for-years remains after
termination of the period or lease is invalid).
− Termination → written notice at least a full
period in advance (if yearly, 6 months’ notice is
required).
(3) Tenancy at Will – continues until either party
terminates it; usually created by express agreement.
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Hold-Over Tenant – If a tenant holds-over (remains in
possession after the lease ends), the landlord may:
a) Initiate eviction proceedings; OR
b) Hold the tenant over.
When a hold-over occurs, an implied month-to-month
tenancy is created with identical terms to the original
lease.
− If tenant is informed of a higher rent before the
end of the lease, the higher rent applies.
Repairs → Co-tenant is entitled to reimbursement for
the costs of necessary repairs paid for (unless there was
a wrongful ouster).
C.
Tenant’s Duty to Pay Rent – runs with the land.
If tenant remains on land + does not pay rent,
landlord can:
a) Evict the tenant; OR
b) Allow the tenant to remain on the property and
sue for damages.
If tenant abandons the property and doesn’t pay rent,
landlord may have to take reasonable steps to mitigate
losses (depends on state law).
Co-Tenant’s Entitlement to Rent / Reimbursement
Rent from Co-Tenant → An out-of-possession cotenant DOES NOT have the right to receive rent unless:
a) otherwise agreed; OR
b) wrongfully ousted.
Termination → notice + reasonable time to quit
the premises (in some states, no notice is
required).
Implied Warranty of Habitability – Landlord MUST
provide a place to live that is habitable → reasonably
suitable for human needs.
− Implied in every residential lease.
− Some courts also impose this warranty in
commercial leases (in limited circumstances).
If warranty is breached, tenant may:
a) move out & terminate the lease;
b) withhold or reduce the rent;
c) repair the issue & deduct the cost; OR
d) remain on the premises & sue for damages.
M
Constructive Eviction – Every lease includes an
implied covenant of quiet enjoyment that prevents a
landlord from interfering with the tenant’s quiet
enjoyment and possession of the property.
− This covenant is breached when a tenant is
constructively evicted.
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REAL PROPERTY
−
Constructive Eviction → occurs when:
1) Landlord breached a duty to tenant;
2) The breach caused a loss of the substantial
use and enjoyment of the premises;
3) Tenant gave landlord notice of the condition;
4) Landlord failed to remedy the condition within
a reasonable time; AND
5) Tenant vacated the premises.
*If constructive eviction occurs, tenant may terminate the
lease and seek damages.
−
Sublessee is NOT liable to the landlord for rent or other
covenants (there is no privity of estate).
− Sublessor (original tenant) remains liable to
landlord for rent (privity of contract).
H
Residential Leases → landlord has a duty to (1) repair
common areas, and (2) warn of latent defects that create
a risk of serious harm that the landlord knows of (or
should know of).
Commercial Leases → landlord has NO duty to repair.
H
H
Landlord’s Duty to Mitigate Damages
Common Law → NO duty to mitigate damages.
Most States → Impose a duty to take reasonable steps
to mitigate losses (i.e. attempting to lease the property to
another).
− The mitigation DOES NOT need to be
successful in order to recover damages.
Assignment of a Lease – when a tenant transfers ALL
of his remaining lease interest to a third-party.
− A lease may be freely assigned UNLESS the
lease states otherwise.
− An assignment CANNOT be for a longer period
than the remaining lease term.
D.
M
Notice = actual (knowledge), constructive (covenant is
recorded), OR inquiry (inspection would reveal it).
M
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Real Covenant – a non-possessory interest in land that
obligates the holder to either do something or refrain
from doing something.
− Remedy = damages
To enforce the Burden of a Covenant, must have
elements (1)-(4) above, PLUS:
1) horizontal privity between the original parties
(the two parties shared some interest in the land
independent of the covenant), AND
2) the new owner must of had notice of the
covenant.
If a lease silent on the Standard of Consent (a silent
consent clause):
− Most States → landlord may withhold consent for
any reason.
− Some States → landlord MUST have a
reasonable basis for withholding consent.
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Covenants & Equitable Servitudes
To enforce the Benefit of a Covenant, must have:
1) a writing satisfying the statute of frauds,
2) intent that the covenant runs with the land,
3) vertical privity – when a successor holds the
entire interest held by a predecessor, AND
4) the covenant touches & concerns the land
(makes the land more useful or valuable).
Landlord’s Consent for Assignment → If the lease
requires landlord’s consent, consent MUST be obtained.
− Landlord waives the right to enforce a provision
prohibiting assignment if he accepts rent from
the assignee.
Subleases – when a tenant (sublessor) transfers ONLY
SOME of his remaining lease interest.
Surrender of a Lease – an agreement to end a lease
early.
− Landlord must clearly accept surrender of the
lease (unless otherwise agreed).
− An attempt to end the lease early (such as
leaving the keys) DOES NOT constitute a
surrender unless landlord clearly accepts.
If landlord:
− ACCEPTS the surrender → tenant’s duty to
pay rent (after the acceptance) ends.
− DOES NOT accept the surrender → tenant is
deemed to have abandoned and is liable for
damages.
Liability for Rent / Breach:
− Assignee → liable to the landlord for rent and all
other covenants that run with the land (privity of
estate).
− Assignor (Original Tenant) → also remains
liable for rent (privity of contract).
M
Tenant may freely sublet UNLESS a provision in
the lease states otherwise.
A sublease CANNOT be for a longer period than
the remaining lease term.
Equitable Servitude – a covenant that equity will
enforce if the burdened estate had notice of the
covenant (regardless of whether it runs with the land).
− Remedy = injunctive relief
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REAL PROPERTY
4 Ways to Create an Easement:
To enforce the Benefit of an Equitable Servitude, must
have:
1) a writing satisfying the statute of frauds,
2) intent for the servitude to be enforceable, AND
3) the servitude touches and concerns the land
(makes the land more useful or valuable).
Easement by Grant → Requires:
1) a writing signed by the grantor;
2) identify the land and parties involved; AND
3) indicate grantor’s intent to convey the easement.
*Scope = the use agreed upon.
Easement by Prescription → Created when a
possessor’s use of the land is:
1) open and notorious;
2) continuous;
3) hostile (without permission from the land owner);
AND
4) for the statutory period (i.e. 10 years).
*Scope = actual usage during statutory period.
To enforce the Burden of an Equitable Servitude,
must have elements (1)-(3) above, PLUS (4) the new
owner must have notice of the servitude (actual,
constructive, or inquiry).
M
Common Scheme or Plan Doctrine – courts will imply
reciprocal restrictive covenants on land parcels in a
subdivision sold by a developer ONLY IF:
1) Developer had a common scheme or plan that
ALL parcels would be subject to the restriction at
the time sold; AND
2) Land owner had notice of the restriction – (a)
actual, (b) constructive/record, or (c) inquiry –
obvious from looking at the subdivision.
Easement by Implication → Established when:
1) a single tract of land is divided by a common
owner;
2) a pre-existing use by the grantor is established
prior to the division;
3) continuous and obvious indication that the use
was meant to be permanent;
4) the use affects the value of the land conveyed;
AND
5) the use is reasonably necessary for the owner’s
use and enjoyment of the land conveyed
(important or highly convenient).
*Scope = the prior use.
Reciprocal negative servitudes only apply to negative
covenants and equitable servitudes.
M
Condos, Co-Ops, & HOA’s – A Common Interest
Community (“CIC”) is a development/neighborhood of
individually owned lots which have an obligation to:
a) pay for/contribute maintenance of the
property held in common; OR
b) pay dues or assessments to an association
that maintains the neighborhood and/or
properties.
*Typical CIC’s = condos, co-ops, and HOA’s.
Residents and successive owners are subject to
recorded obligations (restrictive covenants) that run with
the land.
E.
H
Easements & Licenses
Easement – is a non-possessory interest in the use of
someone else’s land.
− Easement in Gross → benefits a specific
owner’s enjoyment (DOES NOT pass to
subsequent owners, unless easement is for
commercial activity).
− Easement Appurtenant → benefits any owner’s
enjoyment (DOES pass to subsequent owners, if
owner had notice).
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Easement by Necessity → Created if:
1) land owned by one owner is subdivided; AND
2) the easement (access of land) is essential to the
use because no other ingress/egress is
available.
*Scope = is limited to remedying the necessity.
H
Termination of an Easement – An easement may be
terminated by:
a) Estoppel – when the servient estate owner
reasonably relies (or materially changes
position) on an assurance that the easement will
not be enforced;
b) Termination of the necessity;
c) Involuntary destruction of the servient estate;
d) Condemnation of the servient estate;
e) Written release;
f) Abandonment – a physical action showing an
intent to never use the easement again;
g) Merger of the properties (if land is separated
again, it does not revive the easement); OR
h) Prescription.
4
11
M
M
REAL PROPERTY
License – the privilege to use another’s land in a
particular way.
− Doesn’t need to be in writing.
− May be revoked at any time by the licensor, BUT
licensor may be estopped from revoking if
licensee invested substantial money/labor in
reasonable reliance.
*A license is NOT an interest in land.
Profit – gives the holder the right to take natural
resources such as petroleum, minerals, timber, and wild
game from the land of another.
F.
M
Title Acquired – Is the same title that the original owner
possessed.
Constructive Adverse Possession – If a person takes
possession of a portion of land under color of title
(invalid deed), the adverse possession extends to the
entire portion of land described in the deed/title.
H.
M
Fixtures
Fixture – Is an item affixed to the land/dwelling so that it
becomes part of the land.
− Whether an item is a fixture is determined by
objective intent.
G.
H
Some Courts → will NOT apply the merger doctrine if it
doesn’t carry out the probable intent of the parties.
− Examples: mutual mistake, scrivener’s error.
M
Adverse Possession
Elements – The possession must be:
1) Continuous for the statutory period;
2) Open and notorious – use that would put a true
owner on notice;
3) Exclusive;
4) Actual – possess the land as a true owner
would; AND
5) Hostile and under a claim of right (without the
true owner’s consent).
If seller CANNOT convey marketable title at closing, the
buyer may withdraw without penalty.
− A buyer MAY waive the defect. If the buyer
waives, seller cannot cancel the contract.
M
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Warranty of Marketable Title – The Seller has the duty
to convey marketable title to a buyer.
− Marketable Title = title must be free from any
cloud and not subject to any adverse claim.
Title is Unmarketable if the property has a substantial
defect, such as:
a) Defect in the record chain of title; and/or
b) Encumbrances → mortgages, liens, restrictive
covenants, easements, a claim of adverse
possession, or zoning violations.
*Zoning restrictions DO NOT make title unmarketable.
Adverse Possession – Allows a possessor of land to
acquire title to that land.
Aggregation / Tacking – Adverse possessors in privity
may aggregate their years spent possessing the
property to meet the statutory period.
− Privity → exists when the land is voluntarily
transferred to another (i.e. deed or bequest).
Land Sale Contract Requirements – To be valid, the
contract MUST:
1) Be in writing (satisfy the Statute of Frauds);
2) Describe the property;
3) Identify the parties;
4) Contain the purchase price; AND
5) Be signed by grantor/grantee (depending on
whom the contract is being enforced against).
Merger Doctrine → Once the deed is delivered &
accepted, the land sale contract merges with the deed.
− Result is that rights to sue under the contract are
EXTINGUISHED, and a buyer may only sue
upon the deed.
Determining if a Fixture → Courts consider the (1)
nature of the item, (2) way it is attached, (3) damage that
would result if removed, and (4) extent to which the item
is adapted to the property.
− The more the item is incorporated into the
property, the more likely it’s a fixture.
Trade Fixture Exception – An item attached for a
tenant’s trade or business is NOT a fixture UNLESS
removal causes substantial damage to the property.
– But, the item may become a fixture if it’s not
removed before the end of the lease term.
Land Conveyances
Damages for Breach of Warranty of Marketable Title
– measured by the reduced value of land.
− Courts are divided on whether damages are
recoverable if the encumbrance is known or
obvious (when actual, constructive, or inquiry
notice exists).
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M
REAL PROPERTY
Doctrine of Equitable Conversion & Risk of Loss
Doctrine of Equitable Conversion → splits ownership
between the buyer and seller once the land sale contract
is signed.
– Buyer → has equitable title of the property.
– Seller → has legal title, and holds the property in
trust for the buyer.
I.
M
Risk of Loss:
− Most States → risk of loss transfers to the buyer
upon signing the contract.
− Minority States → Seller bears the risk of loss
UNLESS buyer has possession or title to the
property at the time of loss.
M
M
Action for Specific Performance – Real property is
deemed unique, and specific performance is an
appropriate remedy.
− EXCEPTION → when the property has been
sold to a Bona Fide Purchaser without notice.
H
Home Builder’s Implied Warranty – Protects buyers of
newly built homes against latent defects AND warrants
the home is safe and fit for human habitation at the
time of sale.
− Latent Defect = a defect that could not have
been discovered by a reasonable inspection.
Breach – allows a buyer to recover damages discovered
within a reasonable time for:
a) Defective construction; OR
b) Construction not performed in a workmanlike
manner (the accepted norms of the industry).
Subsequent Purchasers:
− Some States → requires privity of contract with
the home builder.
− Other States → warranty applies because a
subsequent buyer is in the same vulnerable
position.
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Deed Requirements – A valid deed MUST:
1) be in writing;
2) signed by the grantor;
3) identify the parties (grantor & grantee);
4) describe the property; AND
5) indicate the grantor’s intent to convey the land.
Grantor’s Intent to Convey Land – Any words
indicating grantor’s intent to immediately convey the land
are sufficient (i.e. grant, convey, give, transfer).
− BUT, intent will not be found if: (a) grantor
expressly reserves the right to revoke the deed;
OR (b) gives an instruction to only deliver the
deed upon grantor’s death.
Time for Performance – Even though a land sale
contract may specify a closing date, the time for
performance may be changed if requested by one of the
parties.
EXCEPTION → If the contract contains a “time is of the
essence” clause.
− If buyer fails to perform on the closing date, it’s
deemed a material breach and the seller may
keep the down payment as liquidated damages.
Title to Real Property
When a deed is unconditional on its face and given to
a grantee, any additional oral conditions are NOT
valid.
− BUT, if same deed is given to a third-party (i.e.
to be held in escrow), the additional conditions
create a conditional delivery.
H
Types of Deeds
General Warranty Deed – Contains 6 covenants of title:
Present Covenants (only breached at the time of
conveyance):
1) Seisin – rightful owner;
2) Right to convey; and
3) Covenant against encumbrances.
Future Covenants:
1) Warranty – to defend against any third-party
claims to title;
2) Quiet enjoyment – to not be bothered by a
third-party’s claim to title; and
3) Further assurances – to do whatever is
reasonable to perfect title.
Enforcement of Present Covenants:
− Common Law → present covenants are NOT
enforceable by remote grantees.
− Some States → will enforce the covenant
against encumbrances if the remote grantee did
not have notice of the encumbrance.
Special Warranty Deed – Warrants that seller has not
breached the covenants of title during the ownership:
1) Seller has not previously conveyed the property;
AND
2) No encumbrances against title made by seller.
6
11
REAL PROPERTY
Quitclaim Deed – Is an “as is” deed; contains NO
warrantees/covenants.
− The grantor is NOT liable for any encumbrances
or defects in title.
M
H
Estoppel by Deed – If grantor conveys title to real
property before he owns it, the title will automatically
vest in the grantee as soon as grantor acquires title.
M
Purchase Money Mortgage – Used by the buyer (the
borrower) to purchase real property, and the seller is the
lender who secures the mortgage on the property.
− The holder has priority over ALL other junior and
senior mortgages.
H
Future-Advance Mortgage – Is a loan by which the
lender may provide future payments under the original
loan.
− Lender secures the mortgage for the ENTIRE
amount the loan, including future advances.
Chain of Title – shows all transfers for a piece of land.
− 2 Indexes → one organized by names of
grantors, and one organized by names of
grantees.
Obligatory vs. Optional Future Payments:
− Obligatory → lender has a duty to advance
funds regardless of the situation (no discretion).
− Optional → lender has discretion whether to
make future advances.
Wild Deed = A deed NOT recorded properly, and thus
not discoverable in the chain of title.
− A wild deed DOES NOT put subsequent
purchasers on constructive notice of a land
transfer.
M
Recording Statutes & Notice – 3 Types:
− Notice Statute Jurisdiction → a subsequent
bona fide purchaser (no notice + pays value) will
prevail over a prior grantee that failed to record.
− Race Statute Jurisdiction → whomever
records first prevails (notice is irrelevant).
− Race-Notice Statute Jurisdiction → a
subsequent bona fide purchaser (no notice +
pays value) is protected ONLY IF he records
before the prior guarantee.
Priority Over Other Creditors:
− Future payments are obligatory → ALL
payments are part of the original loan and have
priority over later liens.
− Future payments are optional → the future
payment(s) DO NOT have priority over liens
recorded before the payment is made.
M
Deed of Trust – Similar to a mortgage, but involves 3
parties:
1) Borrower (the purchaser of the property);
2) Lender, and
3) Third-party Trustee who holds title to the
property until the loan is paid off.
*Title is transferred to the purchaser once the loan is
paid.
M
Assumption & Transfer Subject to a Mortgage
Notice = (a) actual notice; (b) constructive (record)
notice; or (c) inquiry notice (notice of what a reasonable
inspection of land would provide).
H
Bona Fide Purchasers & The Shelter Rule
Bona Fide Purchasers (BFP) – is a person who:
1) takes real property without notice of a prior
conveyance; AND
2) pays valuable consideration.
*A person who receives land by gift (a donee) or by
bequest (heir, devisee) is NOT a Bona Fide Purchaser.
Shelter Rule – A person who purchases land from a
BFP receives the same status and rights as the BFP.
J.
M
Mortgages / Security Devices
Mortgage Requirements – To be valid, the mortgage
MUST:
1) be in writing,
2) be signed by the party to be charged, AND
3) reasonably identify the parties and the land.
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Assumption of a Mortgage → may be express or
implied.
− Express Mortgage Assumption – occurs if there
is an express agreement for grantee to (1) take
the real property, AND (2) continue making
mortgage payments.
− Implied Mortgage Assumption (only allowed in a
few states) – occurs if: (1) no express
agreement exists; (2) grantee/buyer pays the
seller only the equity in the home; AND (3)
grantee continues to make payments to the
lender on the balance of the mortgage.
If a buyer “assumes” the mortgage, he is primarily and
personally liable on the mortgage.
− Seller remains secondarily liable.
7
11
REAL PROPERTY
Transfer Subject to a Mortgage → If a buyer takes real
property subject to a seller’s mortgage, he is NOT
personally liable on the mortgage.
− BUT, a duly recorded mortgage remains on the
land, and mortgagee (lender) may foreclose on
the mortgage.
M
Foreclosure – It extinguishes (destroys) all junior
mortgages.
− All senior (prior recorded) mortgages are NOT
affected.
Order of Preference – Proceeds from a foreclosure sale
are used to pay off debts in this order:
1) Attorney fees and expenses associated with
the sale.
2) Debts owed to mortgagee (the lender).
3) Any amount leftover goes to the mortgagor
(debtor).
Deficiency Judgment – Mortgagee (lender) may seek a
deficiency judgment against the debtor if the proceeds
are insufficient to satisfy the mortgage debt.
M
M
Transfer of a Mortgage Note
− Some States → require that the mortgage note
be assigned along with the mortgage.
− Other States → the note automatically follows
the mortgage when it’s properly assigned (even
without notice to the mortgagor).
A mortgagor is NOT liable to an assignee of the
mortgage note (for any payments made to the assignor)
if:
1) mortgagor pays assignor, AND
2) never received notice of assignment.
K.
Previous Non-Conforming Use – Allows a landowner
to continue to use his land in violation of a later enacted
zoning law.
− If the prior use was originally legal, a
subsequent zoning law will NOT bar the
continued use.
*The non-conforming use MUST be continuous,
otherwise it’s no longer protected.
Changes to a Non-Conforming Use Property:
− Insubstantial changes and reasonable
alterations to repair the property →
PERMITTED.
− Substantial changes that enlarge, alter, or
extend the non-conforming use → NOT
ALLOWED.
L.
M
Conflict of Laws
Conflict of Laws for Real Property Cases – Apply the
State law where real property at issue is located (the
situs rule) for cases involving the title/sale of real
property.
− Rest. 2nd Approach → it is presumed that the
situs State has the most significant
relationship.
− Rest. 1st Approach → apply State law where the
real property is located (situs rule).
− Interest Analysis Approach → the State law
where the real property is located will generally
govern UNLESS another State has a greater
interest in having its law applied.
If the land is merely incidental to a contract (i.e.
brokerage contract, mortgage agreement), then apply
the choice of law rules for contracts.
Zoning
M
Zoning Ordinances & Laws (land-use regulations) –
are ALLOWED when it reasonably protects the health,
safety, morals, or general welfare of the community.
M
Variance – Is an exception to a zoning ordinance.
− Two types → (i) use variance, and (ii) area
variance.
A variance application may be granted if:
1) Property owner shows he will suffer hardship
because of the ordinance; AND
2) Variance will not damage or harm the public
welfare.
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8
12
SECURED TRANSACTIONS
A.
H
H
Applicability & Scope of UCC Article 9
Applicable Law – Article 9 of the UCC governs any
transaction (regardless of its form) that creates a
security interest.
− Includes → security interests in personal
property, consignments, sale of accounts,
chattel paper, & promissory notes.
L
Deposit Account = An demand, time, savings, or similar
account maintained with a bank (can only be
perfected by control).
− DOES NOT include investment property or
accounts evidenced by an instrument.
H
Inventory = Goods that are:
a) Leased;
b) Held for sale/lease or to be given under a
contract of service;
c) Given under a contract of service; OR
d) Consisting of raw materials, work in process, or
materials used/consumed in a business.
*Inventory DOES NOT include farm products or goods
held only for repair.
H
Equipment = Goods other than inventory, farm
products, or consumer goods.
− Goods = all things movable when the security
interest attaches (including fixtures, timber,
unborn young of animals, crops, and
manufactured homes)
Scope of UCC Art. 9 – Substance over form controls,
as to whether a security interest is created.
− How the parties classify the transaction is
immaterial.
Title to Collateral is Immaterial – UCC Art. 9 applies to
a security interest regardless of whether title to the
collateral is in the name of secured party.
− Seller CANNOT retain or reserve title to goods
that have been delivered or shipped. Any
attempt to retain/reserve title is limited to a
reservation of a security interest.
Lease vs. Security Interest – Courts look at the
economic reality to determine if a lease is actually a
security interest.
A “lease” will be deemed a security interest if:
1) A commitment to make payments for a term
exists; AND
2) Either:
a) The original term is equal to (or greater)
than the remaining economic life of the
goods;
b) Lessee must renew the lease for the
remaining economic life of the goods (or is
forced to take ownership);
c) Lessee has an option to renew the lease
for the remaining economic life of the
goods for no additional consideration; OR
d) Lessee has the option to become the
owner of the goods for no additional
consideration.
B.
Definitions
TYPES OF COLLATERAL
H
Account = A right to payment of a monetary obligation
(whether or not earned by performance).
− Includes → (1) property that has been (or is to
be) sold, leased, or disposed of; (2) services
rendered; (3) policy of insurance; (4) secondary
obligation incurred; (5) energy provided; (6) use
or hire of a vessel under a charter/contract; (7)
credit card debt; and (8) lottery winnings.
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“Certificate of Title” Statute – Some States require
that a security interest on a motor vehicle be noted on
the title inorder to be perfected.
H
Consumer Goods = Goods purchased primarily for
personal, family, or household purposes.
H
Proceeds = The following types of property:
a) Acquired upon the sale, lease, or other
disposition of collateral;
b) Collected/distributed on account of collateral;
c) Rights arising out of collateral;
d) Claims arising out of the loss, nonconformity,
defect, or interreference with the use of
collateral; OR
e) Insurance payable by loss of collateral.
*A check given in exchange for collateral is “cash
proceeds”.
M
Chattel Paper = A record that evidences:
1) a monetary obligation; AND
2) either (a) a security interest in specific goods, (b)
a lease of specific goods, or (c) a security
interest in specific goods with software (or a
software license used in the goods).
Monetary Obligation = An obligation to pay money that
is:
a) secured by the goods; OR
b) owed under a lease of the goods.
1
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SECURED TRANSACTIONS
C.
H
Attachment & Perfection – To obtain a valid security
interest in collateral, a creditor MUST: (1) attach the
collateral; AND (2) perfect its interest.
− Attachment → secures the creditor’s rights in the
collateral.
− Perfection → gives notice of the creditor’s rights
in the collateral.
*A security interest CANNOT be perfected, unless it’s
first attached.
Attachment requires:
1) That creditor extend value to the debtor;
2) Debtor must have rights in the collateral; AND
3) One of the following:
a. An authenticated record or security
agreement (authenticated by debtor +
reasonably identify the collateral);
b. Secured party has possession of the
collateral;
c. Certificated security in registered form
+ security certificate delivered to the
secured party; OR
d. Control for deposit accounts, electronic
chattel paper, investment property, or
letter-of-credit rights.
Perfection is obtained by:
a) Filing a financing statement with the Secretary
of State (must identify the collateral and security
interest); OR
b) Taking possession or control of the collateral.
M
Financing Statements – An effective financing
statement MUST:
1) Provide the name of the debtor and secured
party (if debtor is an organization, must provide
official registered name);
2) Indicate the collateral covered; AND
3) Be filed by a person authorized by the debtor.
Substantial compliance with the above is required.
− Minor errors/omissions are ok UNLESS it makes
the statement seriously misleading.
− Insufficient name of debtor → is seriously
misleading UNLESS the statement is
discoverable in a search of the records of the
filling office under debtor’s correct name.
H
−
Attachment & Perfection
−
PMSI for Consumer Goods → automatic
perfection.
PMSI for Non-Consumer Goods → takes
priority if the creditor files a financing statement
before/within 20 days after debtor receives
delivery of the collateral.
L
Payment Right Sold & Rights/Title of Creditors &
Purchasers – A debtor that has sold an account, chattel
paper, payment intangible, or promissory note DOES
NOT retain an interest in the collateral sold.
− BUT, when determining the rights of
creditors/purchasers of an account or chattel
paper sold by a debtor, the debtor is deemed
to have rights in such collateral while the
buyer’s security interest is unperfected.
L
Automatic Perfection for Certain Assignment of
Accounts – A security interest is automatically perfected
upon attachment of an assignment of accounts IF IT
DOES NOT transfer a significant part of the
outstanding accounts of the assignor.
D.
H
Validity of Security Agreements & Rights of
Parties
Security Interest in the Sale of Collateral &
Identifiable Proceeds – A security interest will
continue despite any sale, lease, or other disposition of
the collateral.
− UNLESS the secured party authorizes a transfer
free of the security interest.
A perfected security interest will attach to any identifiable
proceeds from the disposition of collateral.
− HOWEVER, that interest will become
unperfected on the 21st day after attachment
UNLESS:
a) Proceeds are identifiable cash
proceeds;
b) Security interest is perfected when it
attaches to the proceeds or within 20
days; OR
c) If ALL of the following are satisfied: (i)
original collateral was perfected under
the general filing rule; (ii) proceeds are
collateral that may be perfected by filing;
and (iii) proceeds are not acquired with
cash proceeds.
Purchased Money Security Interest (PMSI) – a PMSI
is created when a creditor extends value to the debtor
for the purpose of enabling the debtor to acquire rights in
the collateral.
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2
12
L
L
SECURED TRANSACTIONS
Consignment – Treated like a PMSI in inventory.
A consignment is a transaction in which:
1) A person delivers goods to a merchant for the
purpose of sale;
2) Merchant deals in goods of the kind, is not an
auctioneer, and is generally not known by his
creditors to be substantially engaged in selling
goods of others;
3) Value of goods is $1,000 or more at the time of
delivery;
4) Goods are not consumer goods immediately
before delivery; AND
5) Transaction does not create a security interest.
H
Perfect Interest vs. Perfected Interest → Rule of “first
in time, first in right” controls – first creditor to perfect has
priority.
Transfers of Collateral – A buyer receives ALL of the
rights the seller had upon the transfer of goods.
Buyer in the Ordinary Course of Business – takes
free of a security interest.
Buyer in the Ordinary Course of Business = a person:
1) that buys goods in good faith,
2) without knowledge that the sale violates the
rights of another person, AND
3) is in the ordinary course from a merchant (a
person in the business of selling goods of that
kind).
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Priority of Perfected & Unperfected Interests
Unperfected Interest vs. Unperfected Interest → The
first creditor to attach will prevail.
PMSI vs. Perfected/Unperfected Interest → A PMSI in
consumer goods enjoys automatic perfection, so it has
priority.
− PMSI’s in non-consumer goods require filing a
financing statement to be perfected → so apply
the appropriate priority rule above (depending if
the interest was perfected or unperfected).
Thus, a seller who did not have title to goods CANNOT
transfer title to a buyer (unless an exception applies).
− Exceptions → (1) Shelter Principle, (2) Buyer in
the Ordinary Course of Business, (3) Consumerto-Consumer Rule.
H
Priorities
Perfected Interest vs. Unperfected Interest →
Perfected interest has priority over a conflicting
unperfected interest.
Protection of a Buyer of Goods
The Shelter Principle → If a buyer acquires property
free of a security interest, then any subsequent
transfer is also free of the security interest.
Consumer-to-Consumer Rule – Buyers of consumer
goods take free of a security interest if the goods are
bought:
1) without knowledge of the security interest;
2) for value;
3) from a consumer who primarily bought the
goods for personal/family/household purposes;
AND
4) before the filing of a financing statement
covering the goods.
F.
Future Advances – A security agreement may provide
that the collateral secures future advances (whether or
not the advances are mandatory).
E.
M
M
Control of a Deposit Account – a deposit account can
only be perfected by control.
A secured party has “control” if:
a) The secured party is the bank where the
account is maintained;
b) The debtor, secured party, and bank have
agreed as such in an authenticated record; OR
c) The secured party becomes the bank’s
customer with respect to the deposit account.
M
Example → If a person entrusts goods to a merchant
who deals in goods of that kind, then that merchant has
the power to transfer title to a buyer in the ordinary
course of business (even though the merchant seller did
not have title to the goods).
L
Priority of Liens Arising by Law – A possessory lien
on goods has priority over a security interest in goods.
− UNLESS the lien is created by a statute that
states otherwise.
A Possessory Lien is an interest that:
1) Secures payment/performance of an obligation
for services or materials furnished by a person
in ordinary course of business;
2) Is created by statute or rule of law in favor of
the person; AND
3) Whose effectiveness depends on the
person’s possession of the goods.
Example → mechanic’s lien.
3
12
H
M
SECURED TRANSACTIONS
Judgment Liens – Judgment lien creditors have priority
over conflicting security interests ONLY IF the person
became a judgment lien creditor before the security was
perfected.
− Priority also extends to future advances secured
more than 45 days after the person became a
lien creditor UNLESS the advance is made
without knowledge of the lien.
▪ BUT, this rule DOES NOT apply to a
buyer of accounts or a consignor.
H.
H
Fixtures – An ownership interest in real property has
priority over conflicting security interests in fixtures.
− BUT, see exceptions below.
Exception #1 → Perfected PMSI in a Fixture has
priority if:
1) Debtor has an interest of record or is in
possession of the real property;
2) Ownership interest arose before the goods
became fixtures; AND
3) PMSI was perfected before the goods
became fixtures (or within 20 days thereafter).
Exception #2 → Fixture Filing – requires:
1) Filing a financing statement that covers
goods that are or will become fixtures;
2) Satisfy the general rules for financing
statements (names of debtor, name of secured
party/representative, and indicate collateral);
AND
3) Satisfy real property filing rules: (i) state that it
covers a fixture; (ii) filed in real property records;
(iii) sufficient description of the real property; and
(iv) provide the name of a record owner (if the
debtor does not have an interest of record in the
real property).
G.
L
Certificate-of-Title Statute (that takes priority
over all other interests).
Accessions
Accessions & Commingling
Accessions → Goods that are physically united with
other goods, but still retain their separate identity.
− Security interest in the separate goods
continues in the accession collateral.
− If perfected when the collateral became an
accession, the interest remains perfected.
Commingling → An accession (combining) of two
goods that are each subject to a different security
interest.
− General priority rules govern EXCEPT when
an interest is perfected by compliance with a
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Secured Party’s Rights & Remedies Upon
Default
Right to take Possession of Collateral – After default,
a secured party MAY:
1) take possession of the collateral; AND/OR
2) without removal, render equipment unusable
and dispose of collateral on a debtor’s premises.
The secured party may proceed pursuant to:
a) judicial process; OR
b) without judicial process (if it’s without a breach
of the peace).
H
Right to Dispose of Collateral – After default, a
secured party MAY sell, lease, or otherwise dispose of
the collateral in any reasonably commercial manner.
Notice – Secured party MUST send an authenticated
notification of the disposition to the debtor and any
secondary obligor.
− Notice requirement DOES NOT apply → if the
collateral: (a) is perishable; (b) threatens to
decline speedily in value; or (c) is customarily
sold on a recognized market.
− Secured party will be liable for damages for
failing to provide notice even if the debtor had
actual knowledge of the disposition.
Disposition at Foreclosure Sale – The sale:
1) Transfers all of the debtor’s rights in the
collateral to a transferee for value;
2) Discharges the security interest; AND
3) Discharges any subordinate security interests
(senior interests are not discharged).
*A transferee that acts in good faith takes free of the
rights of the debtor, even if the secured party failed to
comply with the rules governing dispositions.
Commercially Reasonable Sale – Every aspect of the
disposition MUST be commercially reasonable.
A sale is deemed commercially reasonable by law if
made:
a) in the usual manner on any recognized
market;
b) at the current price in any recognized market
at the time of disposition; OR
c) in conformity with reasonable commercial
practices among dealers in similar property.
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SECURED TRANSACTIONS
Secured Party’s Purchase of Collateral – Unless
otherwise agreed, the secured party MAY purchase the
collateral at a:
a) Public sale; OR
b) Private sale, BUT ONLY IF the collateral is (i)
customarily sold on a recognized market, or (ii)
the subject of widely distributed standard price
quotations.
Redemption may occur at any time before a secured
party has:
a) Collected the collateral;
b) Disposed of the collateral (or entered into a
contract to dispose of it); OR
c) Accepted the collateral in full/partial satisfaction
of the debt.
H
M
Right to Collect Directly from an Account Debtor – A
secured party has the right to collect a debt directly
from account debtor (the person obligated on an
account, chattel paper, or general intangible).
Once the account debtor receives proper notification of
an assignment, the debtor can no longer discharge the
debt by payments to the original creditor (the assignor).
− It can only discharge its obligation by payments
to the secured party (the assignee).
I.
Debtor’s Rights Upon Default
H
Damages for a Secured Party’s Failure to Comply
with Applicable Rules – A secured party is liable to
debtor for:
− Actual Damages caused by a failure to comply
with applicable rules. Includes expectation
damages, and may include losses from an
inability to obtain (or the increased cost of)
alternative financing.
− $500 in Statutory Damages.
− Civil Penalty – Applies to consumer goods, and
debtor may recover: (1) damages for loss; and
(2) either the amount not less than (a) the credit
service charge, plus 10% of the principal
obligation, or (b) the time-price differential, plus
10% of the cash price.
− Restrain Collection – A court may order or
restrain collection, enforcement, or a proper sale
of the collateral if a secured party is NOT
proceeding in accordance with the law.
M
Right of Redemption – A debtor has the right to repay
and reclaim property held by the secured party (known
as redemption).
Deficiency Judgments – A deficiency judgment may be
limited when a secured party fails to comply with UCC
Art. 9.
For Consumer Goods Transactions:
− Left for the court to determine.
− Some States → Absolute Bar Rule – bars
collecting any deficiency.
− Other States → Rebuttable Presumption Rule
– presumed that the proceeds equal the total
debt owed (unless the secured party proves
otherwise).
For Non-Consumer Transactions → If (1) a debtor
places a secured party’s compliance at issue AND (2)
the secured party fails to prove disposition was proper,
THEN the deficiency amount recoverable is limited to
an amount by which the total debt exceeds the
greater of the:
a) Proceeds of the disposition; OR
b) Amount that would have been realized had the
secured party complied with UCC Art. 9
*The amount of proceeds = the total debt unless it’s
proven that compliance would have yielded a smaller
amount.
To redeem collateral, the debtor MUST:
1) fulfill all obligations; AND
2) pay reasonable expenses and attorney’s fees.
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5
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TORTS
A.
Intentional Torts
H
Battery – is an (1) intentional, (2) harmful or offensive
contact (that offends a reasonable sense of personal
dignity), (3) with the P’s person (including anything
connected to P).
− Intentional = (a) a desire to bring about the
harm/contact; OR (b) knowing the harm/contact
is substantially certain to occur.
*Nominal damages alone are sufficient.
M
Assault – is an (1) intentional act, (2) that causes P to
be placed in reasonable apprehension, (3) of an
imminent harmful or offensive contact with P’s
person.
− Intentional = (a) for the purpose of causing such
apprehension; OR (b) with knowledge to a
substantial certainty that the apprehension will
result.
− Reasonable Apprehension = P must be aware of
D’s act AND believe D is able to commit the act.
*Nominal damages alone are sufficient.
M
M
False Imprisonment – is an (1) intentional act, (2) to
restrain P to fixed boundaries (with no reasonable
means of escape), AND (3) P is aware of the
confinement or harmed by it.
− Intentional = (a) purposely bringing about the
confinement; OR (b) knowing the confinement is
substantially certain to occur.
− Restraint → by physical force or through threats.
*Nominal damages alone are sufficient.
Intentional Infliction of Emotional Distress – is (1)
intentional or reckless conduct, (2) that was extreme
and outrageous (transcends all bounds of decency), (3)
that causes extreme emotional distress (causation),
AND (4) P actually suffers severe emotional distress
(damages).
− Intentional = the person (a) desires to inflict
severe emotional distress; OR (b) knows that
such distress is certain or substantially certain to
result.
− Reckless = a deliberate disregard of a high risk
that emotional distress will follow.
If conduct is directed at a third-party, D is liable for
intentional/reckless infliction of emotional caused to:
a) A member of such person’s immediate family
present at the time; OR
b) Any other person present, if it results in bodily
harm.
M
Trespass to Land – D is liable if: (1) he intentionally,
(2) either (a) enters the land physically (or remains on
the land) or (b) propels physical objects or a thirdperson onto the land (or fails to remove an object he is
under a duty to remove).
− Intent to trespass is NOT required – only the
intent to be on the land is required.
− P must be the possessor of the land at the time
of the trespass.
Damages – P may recover the:
a) decrease in value of the property; OR
b) cost to repair the property.
*Nominal damages alone are sufficient.
M
Trespass to Chattels & Conversion
Trespass to Chattels – liable when:
1) D intentionally interferes with personal
property of another (damage, preventing use by
the owner); AND
2) The amount of damage is small.
Conversion – liable when:
1) D intentionally interferes with personal
property of another (damage, preventing use),
AND
2) The amount of damage is substantial.
*P can recover the full market value of the property.
M
Doctrine of Transferred Intent – The intent to harm
one party can be transferred when:
1) D intends to commit a tort against one
particular individual; AND
2) Either:
a) commits a different tort against that
person; OR
b) another person is injured by the same or
different tort.
*Applies to battery, assault, false imprisonment, trespass
to land, and trespass to chattels.
B.
H
Intentional Tort Defenses
Consent – may be express or implied through words or
conduct.
− CANNOT exceed the bounds of the consent
given.
− P must have capacity to consent.
− May be withdrawn at any time.
− P cannot consent to a crime (some courts).
Apparent Consent → words/conduct are reasonably
understood to be consent (i.e. customary practice, failure
to object).
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TORTS
Implied by Law Consent → occurs in special
circumstances, such as medical emergencies.
H
H
Affirmative Duty – There is NO general duty to act
affirmatively EXCEPT IF:
a) A special pre-existing relationship exists
between the parties (i.e. parent-child,
landowner-entrant);
b) D put P in peril;
c) D has already undertaken to rescue P (but liable
only if it increases the risk of harm or harm is
suffered because of reliance on the person
providing help); OR
d) A duty imposed by law.
H
Reasonable Person Standard – Every person owes a
duty to act as a reasonable prudent person would act
under the circumstances.
− Following community customs & statutory
requirements are relevant, but not dispositive.
It is merely evidence of reasonable care.
Privilege – Is conduct that normally would subject the
actor to liability, but is excused under the circumstances.
Necessity – D is NOT liable for harm to P’s property if
D’s intrusion was (or reasonably appeared to be)
necessary to prevent serious harm to a person or
property.
− Applicable only to intentional torts against
property.
− Public Necessity (compete defense) → when D
acts for the public good.
− Private Necessity (incomplete defense) → when
D is protecting his own (or a few others) property
interests. D is liable for damages UNLESS the
purpose was to help P.
Physical Disability → must act as a reasonable person
with the disability would act.
Self-Defense / Defense of Others – D is not liable for
harm to P if he:
1) reasonably believed P was going to harm
him or another; AND
2) used reasonable force that was necessary to
protect himself or another.
Defense of Property – may use reasonable force to
defend property, but CANNOT use deadly force.
Recapture of Chattels – An owner of wrongfully taken
chattels may take prompt action and use reasonable,
non-deadly force to recover the chattels from the
wrongdoer.
− Force is deemed unreasonable without first
making a demand to return the item UNLESS
the demand is dangerous or futile.
Detain for Investigation – Shopkeepers MAY (1)
temporarily detain, (2) a person reasonably suspected of
theft, (3) in or near their store, (4) for the purpose of
investigation.
− When a request to remain has been made and
refused, reasonable non-deadly force may be
used to detain.
C.
H
Negligence
Prima Facie Case – Elements:
1) Duty,
2) Breach of duty,
3) Causation (actual and proximate cause), AND
4) Damages.
*A party must offer sufficient evidence to prove ALL of
the above elements.
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Mental Disability or Below Average Intelligence →
must act as a reasonable person without the disability
would act.
H
Children – must act as a hypothetical child of similar
age, experience, and intelligence acting under similar
circumstances.
− EXCEPTION → If engaging in an adult activity,
the child has a duty to act as reasonable adult.
H
Professionals – Must act with the knowledge and skill
as an average member of that profession participating
in a similar community.
− Professional → doctors, lawyers, accountants,
engineers, architects, nurses.
Specialist – If holding oneself out as a specialist, then
must act as an average member of that profession
practicing that specialty.
Medical Doctor – Held to the degree of care and skill of
an average qualified practitioner under a national
standard.
Psychologist / Psychotherapist – Also have a duty to
warn victims when their patient makes a credible threat
if: (1) the therapist believed the patient posed a real risk,
(2) of serious physical violence, (3) to a readily
identifiable victim, and (4) failed to take steps to warn the
victim.
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H
TORTS
Land Owner / Possessor Duty to Entrants
To use Negligence Per Se, P must show:
1) Statute’s purpose is to prevent the type of harm
P suffered; AND
2) P is in the class of persons the statute seeks to
protect.
Some States → Landowner/Possessor must exercise
reasonable care under the circumstances to ALL
entrants.
Other States → Duty of care is determined by the type of
entrant:
− Undiscovered Trespasser → no duty is owed.
− Anticipated Trespasser (without permission,
but expected) → (1) reasonable care in
operations on the property, AND (2) must warn
of (or make safe) highly dangerous artificial
conditions that the land owner knows of.
− Licensee (social guest) → (1) reasonable care
in operations; AND (2) must warn of (or make
safe) dangerous conditions that are known, but
not apparent to a guest.
− Invitee (enters for the owner’s benefit, shop, or
business) → The same duty as a Licensee + the
duty to make reasonable inspections to find and
make safe non-obvious dangerous conditions.
Attractive Nuisance – Landowner/Possessor owes a
duty to child trespassers to make the premises
reasonably safe or warn of hidden dangers on the land.
− Will be liable if:
1) knows (should know) of a dangerous
artificial condition – likely to cause
death or serious bodily injury;
2) knows (should know) children are likely
to frequent the area;
3) children are unlikely to discover the
condition or appreciate the risks; AND
4) the risk of harm outweighs the
expense of making the condition safe.
*Attractive nuisance doctrine DOES NOT apply if the
child is engaging in an adult activity.
M
Two Exceptions:
▪ Exception #1 → Compliance with the statute
would have been more dangerous than the
violation of it.
▪ Exception #2 → Compliance was impossible.
H
Restatement (Second) Test – Plaintiff must show that:
1) the injury is of a kind that typically does not
occur in the absence of negligence;
2) other responsible causes are sufficiently
eliminated by the evidence (including the
conduct of P and third persons); AND
3) the negligence was within the scope of duty D
owed to P.
H
Proximate Cause → injury must have been a
foreseeable result of the breach.
− D is NOT liable for remote harms caused.
H
Landlord’s Duty to Tenants – Landlord generally has
NO duty to maintain the leased premises (unless
provided for by law or contract).
− But, landlord MUST warn of latent defects.
Negligence Per Se – The elements of duty & breach
are established when D breaches a statute.
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Causation – P must show that D’s conduct was BOTH
the actual and proximate cause of the injury.
Actual Cause → the “but for” cause.
− Substantial Factor Test – deemed an actual
cause if it’s a substantial factor in bringing
about the injury (even if there are multiple
causes).
Duty to Make Premises Safe from Criminal Acts:
− Common Law → Landlord has NO duty to
provide a safe premises so that tenants are safe
from criminal acts of third-persons.
− Modern View → Landlord has a duty to take
reasonable precautions to protect a tenant
against foreseeable attacks.
H
Res Ipsa Loquitur – Can be used when the breach
element is difficult to prove.
Intervening Cause – Is an act that occurs after the
breach that contributes to the harm.
− Intervening causes that are dependent (a
natural reaction to) D’s wrongful acts → usually
deemed foreseeable.
− If the intervening cause resulted in an
unexpected injury → it’s usually deemed
unforeseeable and D is NOT liable.
Medical Malpractice → is ALWAYS deemed
foreseeable.
Criminal Acts → usually NOT foreseeable UNLESS:
a) D should have anticipated the criminal act; OR
b) D’s conduct makes the criminal act more likely.
H
Eggshell Plaintiff Rule – “Take P as you find P”
D is liable for all harm P suffers as a result of his
conduct, even if P suffers from a pre-existing mental or
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TORTS
physical condition that makes the harm worse than what
a normal person might suffer.
F.
H
D.
H
Negligence Defenses
Employee acts within Scope of Employment when:
a) Performing work assigned by the employer; OR
b) Engaging in a course of conduct subject to the
employer’s control.
Time, Place, & Purpose Test – To determine the scope
of employment, courts analyze whether the conduct:
i) Is of the kind the employee is employed to
perform;
ii) Occurs substantially within the authorized time
and space limits; and
iii) Is motivated (in whole or part) to serve the
employer.
Partial Comparative Negligence → If P is 50% or more
at fault, then P’s claim is barred.
− If P is less than 50% at fault, then damages are
reduced by the percentage of his own fault.
Contributory Negligence → P’s claim is barred if he
contributed to his injury.
− Exception #1 → D had the last opportunity to
avoid the accident.
− Exception #2 → D was reckless.
Intentional Torts – are generally outside the scope.
EXCEPTIONS:
a) Act was specifically authorized by employer;
b) Act was driven by a desire to serve employer;
OR
c) Act was the result of naturally occurring friction
from the type of employment.
MBE / MEE Tip → Only apply pure comparative
negligence (unless explicitly instructed otherwise).
Assumption of Risk – Is a defense to negligence, and
applies if P voluntarily assumed a known risk.
− May be express (by agreement) OR implied (an
average person would appreciate the risk).
E.
H
Respondeat Superior Doctrine – An employer is liable
for an employee’s negligent acts if the employee was
acting within the scope of the employment.
Comparative & Contributory Negligence
Pure Comparative Negligence → P’s negligence (or
assumption of risk) will reduce his recoverable
damages by the percentage of his own fault.
M
Liability for Acts of Others
Not Within Scope of Employment – Conduct is NOT
within the scope if it’s unrelated and not intended to
serve any purpose of the employer.
− BUT see exception below.
Negligent Infliction of Emotional Distress
Negligent Infliction of Emotional Distress – Three
scenarios where a P can recover:
− Near Miss Case → (1) D’s negligence, (2)
creates a foreseeable risk of physical injury, (3)
P is in the zone of danger, AND (4) P manifests
physical symptoms.
− Bystander Claim → (1) negligence by D, (2) P
is a contemporaneous witness to negligent
bodily injury inflicted on P’s close family member
(parent, child, spouse), AND (3) P manifests
physical symptoms.
▪ In a few states → P must also be in the
zone of danger.
− Pre-Existing Relationship → (1) a pre-existing
relationship between the parties, AND (2) D’s
negligent act foreseeably causes distress.
▪ Recovery is rare; only available in
egregious situations.
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H
Liability if Respondeat Superior Doctrine is
Inapplicable – An employer will be liable for acts
outside the scope of employment if:
a) Employer intended the conduct / consequences;
b) Employer was negligent or reckless in selecting,
training, supervising, or controlling the
employee;
c) It is a non-delegable duty; OR
d) Employee had apparent authority, the
appearance of authority enabled the tort, and
the third-party reasonably relied on such
authority.
H
Employee vs. Independent Contractor – Primary
focus is whether the principal had the right to control
the manner and method in which the job was performed.
Factors → courts analyze the following to determine if a
person is an employee or independent contractor:
1) type of work;
2) pay (hourly vs. per project);
3) who supplied the equipment/tools;
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TORTS
4)
5)
6)
7)
8)
degree of supervision;
degree of skill required;
if the work benefits the employer’s business;
extent of principal’s control over work details;
whether agent/contractor is engaged in a distinct
business;
9) length of time employed/engaged;
10) characterization & belief of relationship; and
11) whether agent was hired for a business purpose.
H
G. Liability of Multiple Defendants
M
M
H
H
H
Market Share Liability is appropriate if:
1) All Ds are potential tortfeasors;
2) Products are identical and share the same
defective qualities (or were “fungible”);
3) P is unable to identify which D caused his injury
through no fault of his own; AND
4) Substantially all of the manufacturers of the
product are named as Ds.
Liability for Independent Contractors – Generally, an
employer/principal has NO liability for an Independent
Contractor’s torts.
Exceptions:
1) Inherently Dangerous Activities.
2) Non-delegable duty owed by principal.
3) Estoppel – the principal holds out the contractor
as his agent, third-party reasonably relied on
contractor’s skill, and the third-party suffered
harm.
M
harmed P) are liable in proportion to their share of
the market.
Joint and Several Liability – If multiple Ds are the
proximate cause of a single indivisible harm, then P may
recover the ENTIRE amount of damages from any
defendant.
− BUT, any D who pays more than his share of the
damages may bring action against the other Ds
for contribution.
Indemnification – A passive tortfeasor can assert its
claim against an active tortfeasor to recover the FULL
amount it paid (or may have to pay) to P.
Contribution – D may seek contribution from other Ds if
he pays more than his share of the liability.
− The amount recoverable from each D is based
on each’s percentage share of fault.
Doctrine of Alternative Liability – Allows a jury to find
ALL Ds liable if:
1) multiple Ds are negligent,
2) but it’s unclear which one caused P’s injuries.
Doctrine of Joint Enterprise – Allows the negligence of
one D to be imputed to other Ds if:
1) Multiple Ds are engaged in a common project or
enterprise; AND
2) All Ds have made an explicit/implied agreement
to engage in tortious conduct.
Doctrine of Market Share Liability – If applicable, all
manufacturers (of products identical to the one that
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H.
M
Economic Torts
Defamation – The elements required to prove a prima
facie case of defamation are:
1) a false defamatory statement (a statement that
tends to harm the reputation of another);
2) of and concerning the P made by D;
3) publication by D to a third-party; AND
4) damages.
Slander (an oral defamatory statement) → need to
prove special damages.
− UNLESS it’s Slander Per Se → (a) impugning
business integrity or skill; (b) unchastity of an
unmarried woman; (c) loathsome disease; OR
(d) crime of moral turpitude.
Libel (defamation in a permanent format) → DO NOT
need to prove special damages.
− UNLESS → (1) the statement does not fall within
one of the slander per se categories; AND (2)
the defamatory nature is not clear on its face.
Public Official or Public Figure → MUST also prove
actual malice (recklessness or knowledge of falsity).
− Public Figure = injected themselves into a public
controversy or achieved widespread notoriety.
Private Figure Speaking about a Matter of Public
Concern → MUST also prove negligence.
Defenses to Defamation:
Absolute Privilege → a complete defense
− Applies to statements made → in judicial
proceedings, between spouses, by executive
branch officials, and during legislative
proceedings.
Qualified Privilege → applies when (1) the statement is
conditionally privileged, AND (2) privilege is not abused
(did not act with malice).
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−
M
Applies to statements → by former/prospective
employers (made in good faith for a legitimate
purpose), in gov’t reports of official proceedings,
during testimony in legislative proceedings, in
self-defense, and to warn others about
danger/harm.
M
Intentional Misrepresentation (fraud/deceit) – Plaintiff
must show:
1) Misrepresentation of a material fact by D;
2) D knew the statement was false (scienter);
3) Intent to induce P;
4) Actual and reasonable reliance by P; AND
5) Damages.
Invasion of Privacy Torts
Misappropriation of Name or Picture – occurs when D
(1) used P’s name or likeness, (2) for commercial
advantage (promoting a product/service).
− Newsworthiness is a defense.
Negligent Misrepresentation – Plaintiff must show:
1) A misrepresentation (false statement of material
fact);
2) Supplied for the guidance of others in a
business transaction;
3) D knew (or should have known) that the
information was supplied to guide P in his
business transactions;
4) D was negligent in obtaining or communicating
the false information;
5) Actual and reasonable reliance by P; AND
6) The false information proximately caused P’s
damages.
False Light – occurs when D (1) causes widespread
dissemination, (2) of P’s beliefs, thoughts, or actions, (3)
in a false light, (4) that would be highly objectionable to a
reasonable person.
− If a public figure or matter of public concern →
MUST show actual malice (knowledge of falsity
or reckless disregard).
Intrusion of Privacy – occurs when: (1) D intrudes into
the private affairs of P; (2) P has a reasonable
expectation of privacy; AND (3) the intrusion is highly
objectionable to a reasonable person.
− Examples → reading private mail, illegal
wiretapping.
Concealment = an affirmative act intended to keep
another from learning a fact.
− Concealment is deemed a misrepresentation.
There is NO duty to disclose information UNLESS:
a) a fiduciary relationship exists;
b) it’s necessary to correct an earlier mistake;
c) active concealment occurs; OR
d) a seller of real property knows material facts that
affect the value of the property (that the buyer is
unaware of and cannot reasonably discover).
Public Disclosure of Private Facts – occurs when D
(1) caused widespread dissemination, (2) of truthful
private information, (3) that is highly objectionable to a
reasonable person.
− Newsworthiness is a defense UNLESS actual
malice (knowledge of falsity or reckless
disregard) is present.
M
M
Intentional Interference with Business Relations –
Must prove that:
1) There was contract or business expectancy;
2) D knew of the contract/expectancy;
3) D intentionally induced the party to breach the
contract (or terminate the relationship);
4) A breach occurred; AND
5) P suffered damages.
Defenses:
− Legitimate competitive activity (no dishonest,
wrongful, or illegal act used).
− Giving truthful information.
− Having a financial interest in the party that
breached or terminated.
− Honestly giving requested advice, usually in a
special relationship (i.e. attorney-client, parentchild, clergy-penitent).
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Intentional & Negligent Misrepresentation
Nuisance
Public Nuisance → is (1) an unreasonable interference,
(2) with the health, safety, or property rights, (3) of the
community (a considerable amount of people or an
entire community/neighborhood).
− Must show actual damages.
Private Nuisance → is (1) a substantial and
unreasonable interference, (2) with a person’s use or
enjoyment of her property.
− MUST be offensive, inconvenient, or annoying to
a reasonable person.
Defenses:
− Coming to the nuisance (residential landowner
knowingly came into a neighborhood with a
nuisance).
− Statutory compliance.
6
13
TORTS
I.
M
Wild & Domestic Animals
Domestic Animals – Owner is NOT strictly liable
UNLESS he has knowledge of the animal’s vicious
propensities.
− Includes dogs, cats, & farm animals.
Commercial Supplier = any person/entity engaged in the
business of selling goods of the type (routinely sells such
goods).
− Casual sellers and service providers are NOT
commercial suppliers.
Wild Animals – Owner is SUBJECT TO strict liability
for harm caused regardless of any safety precautions
taken.
Damages Available → Recovery for personal injury and
property damage is allowed.
− Recovery for solely economic loss is NOT
allowed.
Animal owners are strictly liable for the trespass and
resulting property damage caused by their animals (if
reasonably foreseeable).
M
M
Abnormally Dangerous Activity – Is an activity that:
1) is not of common usage in the community; AND
2) creates a foreseeable and highly significant risk
of physical harm (even when reasonable care is
exercised).
*D is subject to strict liability.
J.
H
*The warning MUST be proportionate to the risk.
Common Law Strict Liability
Duty Owed → Product suppliers owe a duty to all
foreseeable users, and MUST act as a reasonably
prudent supplier would for the type of product.
− Breach → will be found if a supplier’s
negligence results in a defective product.
− Suppliers are also liable for all foreseeable
misuses of the product.
*Negligence MUST be shown.
Products Liability
Strict Products Liability – A commercial supplier is
strictly liable for any harm caused by its product.
Elements:
1) Product was defective when it left the hands of
D (manufacturing defect, design defect, or
failure to warn);
2) Product was not altered when it reached P;
3) Caused an injury to P when it was being used
in an intended or unintended foreseeable
use; AND
4) D is a commercial supplier who routinely deals
in goods of this type.
Manufacturing Defect → When the product:
1) differs from the intended design (defect in
manufacturing/production); AND
2) is more dangerous than if made properly.
Design Defect → Exists if the product can be made or
manufactured safer, more practical, and at a similar
cost.
− Trier of fact MUST balance the alternative
designs available (incl. cost & utility) vs. the risk
to consumers.
Failure to Warn → Requires that:
1) P was not warned of the risks of the product,
2) which are not obvious to an ordinary user, but
known to the designer/manufacturer.
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Liability for Negligence – a negligence claim based on
a defective product requires:
1) Duty owed to P;
2) Breach of that duty;
3) Causation (actual & proximate cause); AND
4) Damages.
M
Liability for Breach of Warranty – may be based on a
breach of an express or implied warranty.
− Damages for Breach → personal injury, property
damage, and economic loss.
− Disclaimer of Warranties → usually NOT
effective for a personal injury action.
Implied Warranty of Merchantability → requires that
all goods sold by a merchant (a person dealing in goods
of the kind) MUST be fit for their ordinary purpose.
Implied Warranty of Fitness for a Particular Purpose
→ created when:
1) A seller knows (or has reason to know) of the
buyer’s particular purpose for the goods; AND
2) Buyer relies on seller’s skill or judgment to
select/furnish suitable goods.
*A breach occurs if the goods are NOT fit for the
particular purpose.
Express Warranty → created when (1) a seller makes
an affirmation of fact, promise, description, or provides a
sample, (2) which relates to the goods, AND (3) it
becomes part of the basis of the bargain.
7
14
TRUSTS & FUTURE INTERESTS
reference of a document/writing in existence at
the time the will was executed.
Definitions
UTC = Uniform Trust Code
UPC = Uniform Probate Code
UTATA = Uniform Testamentary Additions to Trusts Act
A.
H
H
Pour-Over Provision – when a Will gifts property to a
previously established trust.
− A pour-over provision DOES NOT create a trust.
It MUST be connected with a previously
created inter vivos trust (a trust created during
testator’s lifetime).
− Revocation or termination of the trust before
testator’s death causes the gift to lapse.
L
Charitable Trust – A trust that confers a substantial
benefit to society.
− Beneficiary → may be indefinite or a class of
persons.
− Rule against perpetuities DOES NOT apply.
− Failure to state a specific trust purpose or
beneficiary DOES NOT make the trust fail –
instead the court will select one.
L
Illusory Trust – when the settlor retains significant
control over the trust property indicating lack of intent
to create a trust.
− Illusory trusts are deemed INVALID.
− Example → settlor a retains a right of withdrawal
and names himself the sole trustee.
L
Resulting Trust – is implied by law if a trust fails for
lack of a beneficiary.
− All trust property returns to the settlor’s estate.
H
Discretionary Trust – when the trustee has absolute
discretion and power to determine when and how
much of the trust property is distributed to the
beneficiaries.
− Trustee’s exercise of discretion MUST be in
good faith (court will only interfere if the trustee
is abusing their power).
M
Support Trust – a trust directing the trustee to pay the
beneficiary as much income as is necessary for the
beneficiary’s support.
Trust Creation
Trust Formation – A valid express trust requires:
1) a definitive beneficiary;
2) a settlor with capacity;
3) intent to create a trust;
4) a trustee named (a trust will not fail when a
trustee fails to act, dies, removed, resigned →
court will appoint one);
5) a valid trust purpose;
6) trust property (a trust is not created until it
receives valid property, but does not have to be
contemporaneous with the signing); AND
7) compliance with any State formalities (i.e.
signed in front of a notary).
Beneficiaries → can be natural persons, corporations,
or organizations.
Trustee → a person CANNOT be the sole trustee AND
sole beneficiary.
M
Precatory Language & Future Promises
Precatory Language → words such as “hope” or
“request” that only express a settlor’s desire DO NOT
create a valid trust or legal obligation.
− Specific settlor intent is required.
Future Promises → A promise to create a trust in the
future is unenforceable UNLESS the promise is a valid
contract (mutual assent, consideration, & no defenses to
formation).
B.
H
L
Types of Trusts
Revocable & Irrevocable Trusts
Majority View → Irrevocable by default UNLESS the
trust states otherwise.
− Irrevocable trusts cannot be modified or revoked
(except in limited circumstances).
Minority View / UTC → Revocable by default UNLESS
the trust states otherwise.
Testamentary Trust – Created through the provisions of
a settlor’s will, and does not take effect until settlor’s
death.
− Creation → (1) will must state the essential trust
terms (beneficiaries, purpose, & trust property);
AND (2) intent must be found from (a) the
express terms of the will, or (b) incorporation by
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Pure Support Trust → Trustee has NO discretion.
Discretionary Support Trust → Trustee has discretion.
− If it contains an ascertainable standard → a
beneficiary may bring an action to compel the
trustee to make payments in accordance with
that standard.
− Example of ascertainable standard → “for a
person’s health, education, support, or
maintenance.”
1
14
TRUSTS & FUTURE INTERESTS
C.
L
How Trust Assets Pass – Trust assets pass according
to the terms of the trust.
− If a testamentary trust/distribution fails, the trust
property passes: (a) under a residuary clause in
a will; OR (b) to the settlor’s heirs by intestacy (if
no applicable residuary clause).
D.
H
Cy Pres Doctrine
F.
L
Spendthrift Trust – a spendthrift provision prevents the
transfer of a beneficiary’s interest in a trust.
− Valid ONLY IF it restrains both voluntary and
involuntary transfers.
▪ Spendthrift trusts DO NOT provide
protection for mandatory distributions of
trust property.
− A spendthrift interest CANNOT be sold or
assigned by the income beneficiary.
A court may also permit invasion if:
a) it’s in the best interests of the beneficiaries; OR
b) for the maintenance and support of the
beneficiaries.
G.
M
H
Rights of Creditors
Spendthrift Provision → Creditor can only collect from
the beneficiary AFTER a payment is made unless an
exception applies (see above).
No Spendthrift Provision → Creditor may attach
present or future distributions to the beneficiary.
Discretionary Trust – A creditor CANNOT compel a
distribution subject to the trustee’s discretion, even if:
a) discretion is expressed in the form of a standard
of distribution; OR
b) the trustee abused their discretion.
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Powers of Invasion
Express / Implied Powers of Invasion → A trustee
CANNOT use trust property to pay income beneficiaries
when trust income is insufficient unless there is an
express or implied power of invasion (derived from
settlor’s words or conduct).
Restraints on Alienation & Rights of Creditors
A creditor CANNOT reach a beneficiary’s spendthrift
trust interest, EXCEPT:
a) Judgment creditor who provided services for the
protection of a beneficiary’s interest in the trust;
b) Creditor who furnished necessities (in some
states only);
c) Order for child support or alimony;
d) Claim by a state or federal govt. (i.e. federal tax
liens); OR
e) Self-settled trust (where settlor retains an
interest – i.e. a revocable trust).
Powers of Invasion
Invasion of Trust Principal → If a beneficiary will
eventually receive trust principal, a court MAY permit
invasion UNLESS it:
a) is contrary to the settlor’s intent; OR
b) adversely affects the other beneficiaries.
Cypress Doctrine – A court may modify a charitable
devise “as near as possible” with the settlor’s intent
if the purpose of the trust/bequest is frustrated.
− ONLY APPLIES if the testator had a general
charitable intent.
− Frustrated = it becomes impracticable,
impossible, or wasteful.
E.
H
Discretionary Trust & Child/Spousal Support → If a
judgment or order exists for unpaid child/spousal
support, the court may:
▪ Order a distribution to satisfy the judgment, and
▪ Direct the trustee to pay the child, spouse, or
former spouse.
How Trust Assets Pass
Modification of a Trust
Modification of a Trust
Majority View → Trust can only be modified by the
settlor who:
a) expressly reserved the power to modify the trust;
OR
b) has the power to revoke or amend the trust.
Minority View → Settlor is free to amend or revoke a
trust UNLESS the trust states otherwise.
Uniform Trust Code (UTC) → A trust may be modified
in the following instances:
a) by the settlor (unless trust provides otherwise);
b) if settlor and beneficiaries consent;
c) the beneficiaries’ consent + modification is not
inconsistent with the trust purpose;
d) it will further the trust purpose because of
unanticipated circumstances;
e) the cy pres doctrine applies;
f) court determines the value of the trust is
insufficient to justify its administration + notice to
all beneficiaries; OR
g) it’s necessary to conform the trust to the settlor’s
intent.
2
14
L
TRUSTS & FUTURE INTERESTS
Equitable Deviation Doctrine – A court may modify the
terms of a trust if:
1) continuing the trust is impractical or wasteful;
AND
2) the modification furthers the trust purpose
because of unanticipated circumstances.
Common Law → ONLY administrative provisions may
be modified.
UTC → dispositive provisions may be modified when
circumstances arise that were not anticipated by the
settlor.
L
L
H
Trustee Powers & Duties
Duty to Administer the Trust – Trustee MUST continue
to administer the trust until it terminates.
− Common Law → Trustee owes the
beneficiaries the duty to act with care, skill, and
prudence.
− UTC → Trustee must administer the trust: (1) in
good faith; (2) in accordance with the trust
purpose and terms; AND (3) in the interests of
the trust beneficiaries.
Termination of a Trust
Termination of a Trust – Under the UTC, a trust may
be terminated if:
a) it’s revoked or expires pursuant to its terms;
b) it’s material purpose is achieved;
c) it becomes unlawful, contrary to public
policy, or impossible to achieve;
d) the settlor + all beneficiaries consent;
e) all beneficiaries consent + court decides that
continuance is not necessary to achieve any
trust purpose;
f) termination will further the purpose of the trust
because of unexpected circumstances;
g) the cy pres doctrine applies; OR
h) the value of the trust is insufficient to justify
the cost of administration.
Distribution Upon Termination – Upon termination, the
Trustee shall proceed expeditiously to distribute the
trust property.
− Trustee may retain a reasonable reserve to pay
trust debts, expenses, and taxes.
The beneficiaries may decide how trust property is
distributed if the trust is terminated by grounds (d) or (e)
above.
M
I.
Additions Clause – Gives a trustee the specific power
to accept or reject additions to the trust property from
a settlor or any other person.
H.
H
BUT, a restraint on marriage will be upheld if:
a) it’s a restraint on re-marriage; OR
b) the purpose is to take care of a person’s daily
needs until they are able to obtain such support
through marriage.
Conditions that Prohibit Marriage / Require Divorce –
The following trust/will provisions are VOID against
public policy:
a) prohibiting a first marriage; and/or
b) requiring a divorce.
*Will be treated as if the restriction was NOT imposed.
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Trustee MUST exercise his powers in good faith and in
accordance with the trust terms and purpose even if he
is granted a broad range of discretion.
L
Duty of Care
Duty of Prudent Administration → Trustee must
administer the trust as a prudent person would.
− MUST exercise reasonable care, skill, and
caution.
Duty to Take Control & Protect Trust Property →
Trustee must take reasonable steps to take control AND
protect the trust property (i.e. obtain fire/casualty
insurance).
H
Self-Dealing (Duty of Loyalty) – Trustee must
administer the trust solely in the interests of the
beneficiaries.
− CANNOT engage in self-dealing.
If Trustee engages in self-dealing:
a) The transaction is voidable by the beneficiary
affected; OR
b) Beneficiary can seek damages.
Five Exceptions where Self-Dealing is Allowed:
1) Authorized by the trust terms.
2) Approved by the court.
3) Beneficiary did not commence a judicial
proceeding within the required time.
4) Beneficiary consented, ratified, or released the
trustee of liability.
5) Transaction occurred before the person became
a trustee.
3
14
M
TRUSTS & FUTURE INTERESTS
Conflict of Interest (Duty of Loyalty) – A transaction is
presumed to be affected by a conflict of interest if
entered into by:
a) Trustee’s spouse;
b) Trustee’s descendants, siblings, parents, or their
spouses;
c) Agent or attorney of the trustee; OR
d) An entity that trustee has an interest in that
might affect the trustee’s best judgment.
Irrevocable Trust → Trustee owes duties to the settlor
and the beneficiaries.
− Trustee is MAY be liable for acting in
accordance with the settlor’s wishes, if it’s to the
exclusion of the beneficiaries.
H
No Further Inquiry Rule → A transaction entered into
by trustee for the trustee’s own benefit is
automatically presumed to be a conflict of interest.
− It is voidable without further inquiry (fairness or
good faith is immaterial).
− For a person who has a close business or
personal relationship with the trustee, the
presumption is rebuttable if the trustee shows
the transaction was not affected by any conflict.
M
Duty to Act Impartially (Duty of Loyalty) – Trustee
MUST act impartially (when investing, managing, &
distributing trust property) giving due regard to the
beneficiaries’ respective interests. Trustee CANNOT be
influenced by personal favoritism or animosity.
L
Failure to Test the Market (Duty of Care) – Trustee’s
failure to test the market for potential buyers may result
in a breach of the duty of care.
H
Investments & Prudent Investor Rule (Duty of Care)
– Trustee must exercise the degree of care, skill, and
prudence of a reasonable investor investing his own
property.
− MUST diversify assets, avoid risky investments,
and keep the trust assets productive.
L
M
Allocated to Income → (1) receipt of rental payments
from real/personal property; (2) money received from an
entity (cash dividends, interest on investments); and (3)
ordinary expenses and repairs.
Allocated to Principal → (1) proceeds from the sale of
a principal asset; (2) all other property received – other
than money received from an entity; and (3)
extraordinary expenses and repairs.
L
Trustee Acting in Accordance with Settlor’s Wishes
Revocable Trust → Trustee owes duties only to the
settlor (during settlor’s lifetime).
− Trustee is NOT liable for acting in accordance
with the settlor’s wishes.
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Damages for Wrongful Invasion of Trust Assets – A
trustee who wrongfully invades trust assets is liable for
the greater of:
a) the amount required to restore the value of
trust property and distributions; OR
b) any profit made by the trustee from the breach.
J.
Future Interests
H
Remainder Beneficiary of a Trust (a.k.a.
remaindermen) – Not entitled to receive trust property
UNTIL termination of the trust.
L
Representation of Remaindermen – A minor,
incapacitated, or unborn person MAY be represented by
a person with a substantially identical interest
UNLESS:
a) already represented; OR
b) a conflict of interest exists.
M
Substituted Takers – A substitute gift is created in the
deceased beneficiary’s surviving descendants if:
1) The beneficiary of a future interest does not
survive the distribution date; AND
2) An anti-lapse statute applies.
*Most States → anti-lapse statutes do not apply to trusts.
Delegation of Trust Duties – A trustee MAY delegate
duties and powers that a prudent trustee would
delegate under the circumstances.
If a trustee delegates a duty, he MUST exercise
reasonable care, skill, and caution in:
1) Selecting an agent;
2) Establishing the scope and terms of the
delegation; AND
3) Monitoring the agent’s performance and
compliance.
*A trustee is NOT liable for an agent’s actions if the
above requirements are followed.
Principal & Income Allocations – Trust receipts and
disbursements are allocated to either principal or
income.
− State law normally controls how each is
allocated.
UPC → If a beneficiary of a future interest DOES NOT
survive the distribution date, the following applies:
− If the gift is not a class gift → a substitute gift is
created in the surviving descendants.
− If the gift is a single generation class gift (i.e.
“children”) → a substitute gift is created in the
4
14
TRUSTS & FUTURE INTERESTS
UPC → expresses intent to exercise the power ONLY IF:
a) the will manifests intent to include property
subject to the power; OR
b) the power is a general power and the creating
instrument does not contain a gift if the power is
not exercised.
surviving descendants of any deceased
beneficiary.
M
Vested Remainder – is an interest where there are no
contingencies or conditions on survivorship.
− Pass to that person’s heirs if the person dies
before the interest becomes possessory.
− Are devisable.
Finding Intent with a Blanket Exercise Clause:
Most States → intent to exercise a power is presumed
with a blanket exercise clause.
Some States & UPC → If donor required the power to
be exercised by an express/specific reference, a blanket
exercise clause is NOT sufficient to show intent.
Common Law → If a remainder person dies before a life
tenant, a vested remainder interest will pass to the
remainder person’s heirs. If no heirs, the interest
passes to the person’s estate.
− Exception → If a survival provision is in the trust.
M
Vested Interests: Condition on Survivorship
Common Law → a condition of survivorship on future
interests in a trust is NOT implied.
UPC → such condition IS implied.
M
Acceleration of Future Interests – A future remainder
interest may be accelerated (take possession
immediately) if the present holder:
a) loses his legal right to the property; OR
b) disclaims his interest (unless the distribution
would harm a beneficiary/potential beneficiary or
the trust terms limit acceleration).
K.
H
M
Special Power of Appointment – The donee may
appoint property ONLY TO those limited persons/groups
authorized by the donor.
− Donee CANNOT appoint property to himself, his
estate, his creditors, or his estate’s creditors.
M
Ineffective Appointments – Appointments to nonauthorized persons/groups are deemed ineffective.
− If more than one appointment is made, the
ineffective appointment will NOT affect other
valid appointments.
− Ineffective appointments pass to the taker-indefault. If no taker-in-default was designated
by the donor, the property passes to the donee
or donee’s estate.
Powers of Appointment
Powers of Appointment – When a testator/settlor gives
another person the power to decide where and to
whom the property will go.
− Donor = testator/settlor.
− Donee = person who has power of appointment.
General Power of Appointment → When Donor leaves
NO conditions or restrictions for the appointment of
property.
Testamentary Power of Appointment → Can only be
exercised in donee’s will and according to donor’s
conditions.
Exercising a Power of Appointment → The power is
effectively exercised in an instrument ONLY IF:
1) the instrument is valid under state law;
2) an intent to exercise the power & it’s consistent
with any conditions; AND
3) the appointment is permissible – it’s to a
person/group authorized by the donor.
Exercise of a Power in a General Residuary Clause:
Most States → is NOT exercised unless donee’s intent
to exercise the power is referenced.
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L.
H
Rule Against Perpetuities
Rule Against Perpetuities (RAP) – Under the common
law, a gift must vest within a life in being at the time
of the grant plus 21 years.
− Invalidates any gift that will not actually vest or
hypothetically vest within that time period.
Vesting of Class Gifts – A class gift vests under RAP
when:
1) the class closes; AND
2) all conditions for every member of the class are
satisfied.
Modern Modifications to RAP:
− Wait and See Approach (some states) → A gift
is valid if it actually vests within 21 years after
the death of a life in being at the time the
interest was created. The court waits to see if
the interest will actually not vest.
− Reduction of Age Contingencies (some
states) → By statute, any age contingency that
violates the rule is reduced to 21 years.
5
15
WILLS & ESTATES
“Within Testator’s Presence”:
Majority View → if within the testator’s line of sight.
Minority View & UPC → if within the range of the
testator’s senses.
Definitions
UPC = Uniform Probate Code
Issue = a person’s lineal descendants
A.
H
Intestate Succession
M
Strict & Substantial Compliance
Common Law → Will is INVALID if it does not meet
State law requirements.
Some States → Will is VALID if decedent substantially
complied with requirements.
UPC Harmless Error Rule → An improperly executed
will is valid if:
1) proven by clear and convincing evidence; AND
2) that decedent intended the writing to be his will.
L
Doctrine of Integration – A document will be integrated
into a will if the Testator:
1) intended it to be part of the will; AND
2) the document was physically present at the
will’s execution.
*May be proven by extrinsic evidence or witness
testimony.
H
Interested Witnesses
Common Law → A will must be witnessed by 2
disinterested witnesses (not receiving a benefit under
the will).
State Exceptions → A will is VALID even if witnessed
by an interested witness when:
a) an interested witness is an heir (but any gift to
that witness is reduced to their intestate share);
OR
b) another disinterested witness was present so
that there were still 2 disinterested witnesses.
H
Codicil – an instrument made after a will is executed
that modifies, amends, or revokes a will.
− To be valid it MUST satisfy the same will
execution formalities.
− If a codicil republishes a will → the will is
deemed executed on the same date as the
codicil.
− It CANNOT republish an invalid will (but it can
cure an interested witness issue).
H
Holographic Will – is a handwritten will (or alteration
to a will) that is NOT WITNESSED.
− Only some states recognize holographic wills.
Those states require the writing to be subscribed
by the testator (signed at the end).
− In states that recognize holographic wills, a valid
holographic codicil revokes an earlier will (to the
extent it conflicts).
Intestate Succession – Any property not passing by a
valid will or by operation of law is governed by a State’s
applicable intestacy statute.
Typical Intestate Succession Rules
If Decedent:
− Leaves only a surviving spouse → spouse will
receive the entire estate.
− Leaves a surviving spouse and issue:
▪ Most States → spouse and issue will
each receive certain %.
▪ UPC → spouse receives the entire
estate if ALL issue are from that spouse.
− Does NOT leave a spouse → decedent’s issue.
− Does NOT leave spouse or issue → surviving
parents.
▪ If no surviving parents → issue of
parents.
Distribution of Assets (Most States) → Assets pass by
the Per Capita at Each Generation approach.
B.
L
Will Execution Requirements
Validity of a Will – A will is valid if it complies with the
applicable State law.
UPC → a written will is valid if complies with the law of
the place:
a) where executed; OR
b) of testator’s domicile, abode, or nationality at
the time of (i) death or (ii) signing the will.
H
Will Execution Formalities – A will is valid if the
specific State law formalities are followed.
Most States → Requires that a will be: (1) in a writing,
(2) signed by the testator, AND (3) witnessed by at least
2 individuals.
UPC → Requires that a will be:
1) In writing;
2) Signed by the testator (or by someone in
testator’s presence and by testator’s direction);
AND
3) Either: (a) signed by at least 2 witnesses
(within a reasonable time after witnessing
testator sign the will); or (b) notarized.
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1
15
C.
H
WILLS & ESTATES
−
Incorporation by Reference & Acts of Independent
Significance
Incorporation by Reference – A bequest through an
unattested memorandum is valid if it meets requirements
of incorporation by reference.
E.
M
Most States → A document or writing will be
incorporated by reference if:
1) It was in existence at the time the will was
executed;
2) It was sufficiently described in the will; AND
3) Testator intended to incorporate it into the will.
UPC → A bequest of tangible personal property (other
than money) will be incorporated if:
1) signed by testator; AND
2) the item & devisees are described with
reasonable certainty.
*The document DOES NOT have to be in existence at
the time of will execution.
L
H
M
Revocation of a Will
Revocation by Physical Act – A will is revoked by
physical act if:
1) the testator intended to revoke the will; AND
2) it is burned, torn, destroyed, or cancelled by
the testator (or someone at his direction).
Revocation by Subsequent Will or Codicil – Testator
may revoke a will by executing a subsequent will or
codicil.
− BUT, the revocation is valid only to the extent
that the previous will conflicts with the new will
UNLESS the new will expressly revokes the
previous will in its entirely.
H
Dependent Relative Revocation Doctrine – Cancels a
previous revocation that was made under a mistaken
belief of law or fact.
− Applies when → Testator would NOT have
revoked the original will but for the mistaken
belief that another will he prepared would be
valid.
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Contractual Wills
Contractual Wills – contracts to execute mutual wills
are enforceable.
− To be enforceable → it MUST expressly state
that the parties intend their wills to be a binding
contract. There must be a specific reference
to the contract on which the joint wills are based.
− If breached → court will impose a Constructive
Trust in favor of original intended beneficiaries.
*The execution of joint will or mutual wills DOES NOT
create a presumption of a contract not to revoke a will.
G.
Distribution of Property
M
Will Takes Effect at Time of Death – A will takes effect
and is construed at the time of testator’s death.
− For distribution purposes, the will is treated as if
it was executed immediately before the death.
− A beneficiary listed in a will DOES NOT have
any interest in the estate property prior to the
testator’s death.
L
Per Capita at Each Generation
Steps to divide assets:
1) Divide the estate into as many equal shares as
(i) surviving descendants in the nearest
generation, and (ii) deceased descendants in
that same generation who left surviving issue (if
any).
2) Each surviving descendant in the nearest
generation is allocated one equal share.
3) Remaining shares (if any) are combined and
then divided in the same manner among the
surviving issue of the next generation of
descendants.
4) Repeat for each generation until all assets are
distributed.
Common Law → words of cancellation are valid ONLY
IF they come in physical contact with the cancelled
words of the will (i.e. written over).
UPC → words of cancellation are valid written anywhere
on the will (no physical contact is required).
M
Revival
Revival of an Earlier Will
Common Law → Automatically revived if a subsequent
will was revoked.
Modern View → Revival permitted only when:
a) Will is revoked by physical act and testator
intended its revival; OR
b) Will is revoked by a subsequent instrument and
that will is later republished by a subsequent will
or codicil.
UPC → Automatically revived BUT ONLY IF the will was
partially revoked by a subsequent instrument (unless no
testator intent to revive).
F.
Acts of Independent Significance – are acts or events
with significance outside of the will-making process.
− Can be used to fill in any gaps of a will.
D.
A court considers the testator’s intent when
determining if the doctrine is applicable.
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WILLS & ESTATES
Modern Per Stirpes (Per Capita by Representation)
Steps to divide assets:
1) Divide the estate into as many equal shares as
(i) surviving issue in the nearest generation, and
(ii) deceased descendants in that same
generation who left surviving issue (if any).
2) Each surviving descendant in the nearest
generation is allocated one share.
3) Remaining shares of each deceased member of
that generation (who leaves surviving issue)
drop down and are divided in the same manner
among their then living issue.
Per Stirpes
Steps to divide assets:
1) Start with the first generation of which there are
living takers.
2) Each living and non-living person in that
generation is entitled to one share.
3) Each share going to a non-living taker drops
down and is split equally among their issue.
H.
L
It’s presumed that each person outlived the
other when distributing assets.
− When property is held as joint tenants → rights
of survivorship are severed, and the property
passes as if held by tenancy in common.
*RUSDA = Revised Uniform Simultaneous Death Act
M
Residue of a Residue Approach
Common Law → No residue of a residue rule.
− Any residuary shares of a decedent’s estate
found invalid would pass via intestacy.
Modern View → Invalid residuary shares of a
decedent’s estate go to the other residuary
beneficiaries.
− BUT, this rule only applies if an anti–lapse
statute does not create substitute taker for a
beneficiary who fails to survive the testator.
M
Conditions that Prohibit Marriage / Require Divorce –
The following trust/will provisions are VOID against
public policy:
a) prohibiting a first marriage; and/or
b) requiring a divorce.
*Will be treated as if the restriction was not imposed.
Construction Problems
Generically Described Property – Applies to property
owned at the time of the decedent’s death matching the
description in the will (i.e. a gift of “my boat”).
− The gift applies to whatever item is owned at the
time of testator’s death regardless of the specific
item owned when the will was executed (i.e. a
different model boat).
L
Ambiguity in a Will – When a will is ambiguous, courts
allow extrinsic evidence to resolve the ambiguity.
− The court may receive any competent evidence
that bears on the testator’s intent.
H
Advancements / Satisfaction
Common Law → Gift to heirs during testator’s lifetime
were considered advancements on that heir’s intestate
share of the estate.
− The amount of the gift would be deducted from
the heir’s share of the estate.
UPC → NOT deemed an advancement unless:
a) the will provides for a deduction; OR
b) a writing indicated that the property was in
satisfaction of a devise or that its value will be
deducted from the value of devise.
M
−
Simultaneous Death
RUSDA → If no proof by clear and convincing evidence
that one person survived the other by 120 hours (5
days), then the property is distributed as if that
person predeceased the other person.
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BUT, a restraint on marriage will be upheld if:
a) it’s a restraint on re-marriage; OR
b) the purpose is to take care of a person’s daily
needs until they are able to obtain such support
through marriage.
H
Lapsed Gifts & Anti-Lapse Statute
Common Law → All gifts in a will were conditioned on
the beneficially surviving the testator.
Anti–Lapse Statute → A lapsed gift will vest in the issue
of a predeceased beneficiary if:
1) that beneficiary is a specified descendant of the
testator (specified by statute); AND
2) the beneficiary leaves issue who survive the
testator.
UPC → Anti-lapse rule applies to gifts to issue (i.e.
children, grandchildren), stepchildren, grandparents, and
grandparent’s issue (i.e. siblings).
H
Ademption – when a gift fails by extinction.
Common Law → A specific gift adeems if it cannot be
identified or is not owned at the time of testator’s death
(intent is irrelevant).
Most States → A specific gift is adeemed ONLY IF the
testator intended the gift to fail. If no intent, the
beneficiary is entitled to:
a) any property acquired as a replacement for the
specific gift; OR
b) a monetary devise equal to the value of the gift.
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WILLS & ESTATES
M
Stock Split & Dividends – A beneficiary of securities
(stock) is entitled to any additional shares acquired by
testator as a result of a stock split or dividend.
L
Exoneration
Common Law → A specific devise of real property DID
NOT pass subject to the mortgage, and the mortgage
was paid from the estate.
Modern View → A devise of real property assumes the
mortgage (unless specifically stated otherwise).
H
H
H
Abatement – If the debts of the estate are greater than
the assets to cover all gifts made, the gifts will abate (be
reduced).
− Creditors of the estate ALWAYS have priority to
estate assets over the beneficiaries.
Order of Abatement:
1) Property passing by intestacy
2) Residuary gifts
3) General gifts
4) Specific gifts
*Each category must be fully abated before moving onto
the next one. Abatement within each category is in
proportion to the amount of property each beneficiary
would receive.
H
If disclaimed, the property:
a) Passes according to the applicable terms of a
will/trust (if any); OR
b) As if the person predeceased the testator (the
gift lapses unless an anti–lapse statute applies).
Generally, bequests and fiduciary appointments in
favor of a former spouse’s relatives remain intact.
− Under the UPC → they are revoked upon
divorce.
L
Prenuptial Agreement – Waiving rights to each other’s
assets upon divorce in a Prenuptial Agreement DOES
NOT apply to voluntary gifts or bequests (i.e. in a will or
trust).
L
Conditional Will – Is a will that takes effect only upon
the occurrence of some uncertain event.
− If the condition is not satisfied, the will is
rendered inoperative and void.
Slayers Statutes – If a beneficiary feloniously and
intentionally kills the decedent → he/she forfeits all
gifts, benefits, and entitlements under a will or intestacy.
− A conviction after appeal is conclusive.
− May be based on a preponderance of evidence
proven during a probate or related court
proceeding.
− Durable Health Care Directive → Withholding
medical treatment is NOT considered to be
felonious and intentional.
Disclaimer – Renouncing a legal right to inheritance.
An Effective Disclaimer MUST:
1) be declared in writing;
2) describe the interest or power disclaimed;
3) be signed by the person making the disclaimer;
AND
4) be delivered or filed.
Timing:
Common Law → must be made within a reasonable
time.
Some States → must be made within 9 months.
UPC → may be made at any time (so long as disclaimer
is not barred – barred if a person accepts or transfers
interest).
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Testamentary Provisions Revoked Upon Divorce – In
all States, a final divorce decree revokes bequests or
appointments of property to a former spouse.
− Some States → revoked if divorce proceedings
are pending.
*All revoked provisions are treated as if the former
spouse predeceased the testator.
To determine if a will is conditional, the court will look at
the testator’s intent, which MUST be clear from the
language of the will.
− A mere statement of motive for making the will is
NOT enough.
I. Types of Gifts
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Types of Gifts
Specific Gift = specifically identified.
General Gift = nonspecific, can be satisfied from any of
the funds remaining in the estate.
− If it’s unclear whether general or specific → court
considers testator’s intent.
Demonstrative Gift = a hybrid – it’s a general gift from a
specific source that the gift should come from (i.e.
money from a specified bank account).
Gift of Stock Shares → may be general or specific
(depending on language and intent).
− Specific Gift → if the testator owns the stock
shares at the time of execution or if it’s stock in a
closely held corporation.
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WILLS & ESTATES
J.
H
Class Gifts
Class Gift – Is a gift to a group of persons described
collectively.
− Class generally closes when testator/settlor
dies.
− Rule of Convenience → class is closed when
any member of the class is entitled to
possession of the gift.
L. Family Protection
M
Amount of Elective Share → varies by state, and is
typically one-third (1/3) of the net probate estate.
The terms “children” or “issue” are interpreted in
accordance with intestate succession rules.
− An adopted child inherits the same as a natural
child.
Net Probate Estate = Gross Probate Estate less
Creditor Claims & Expenses (but not taxes).
− Some states include certain non-probate assets
and lifetime transfers in the gross probate
estate.
− Most states allow the spouse to claim their
elective share against assets of a revocable
trust.
Gifts to Predeceased Class Members depends on the
language used:
− If individual members are named (i.e. Tom,
Mary, & Joe”) → gift will lapse, unless an anti–
lapse statute applies.
− If named as a group → gift is divided among the
other members (unless the will states otherwise
or an anti-lapse statute applies).
The elective share is in addition to any statutory family
exemptions → family residence, exempt personal
property, and family allowance.
H
K.
M
Gifts to Children
Inheritance Rights of Children – Generally, a child has
NO inheritance rights if a parent leaves the child out of
the will (except pretermitted children).
A child intentionally omitted from a will is NOT entitled
to a share of decedent’s estate.
− BUT, if a portion of the will fails, then the child
may still be entitled to their intestate share
(unless the will intentionally disinherits the child).
H
M
Legal Definition of Children
Common Law → only biological, full-blooded children
were entitled to inherit.
Modern View → includes any child, including adopted
children.
− Exception #1 → non-marital children inheriting
from a father must establish paternity.
− Exception #2 → adopted-out children (a child
given up for adoption) are generally NOT
entitled to inherit.
Inheritance by Equitable Adoption – A child may be
informally adopted through words or conduct.
− If a person takes a child in and assumes
parental responsibilities, equity holds the person
as having formally adopting the child.
− Some States → also require that decedent had
promised/agreed to adopt the child.
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Spouse’s Elective Share – Many states have enacted
statutes giving a surviving spouse the right to take a
statutory share of the deceased spouse’s estate (instead
of taking under the will).
Pretermitted Children – A child born or adopted
AFTER the execution of a will is entitled to an
intestate share of the estate UNLESS intentionally
omitted from the will.
− Some States → a child is NOT entitled to a
share if decedent: (a) provided for the child
outside of the will; OR (b) left all (or substantially
all) of the estate to the child’s other parent.
A child living at the time of execution is NOT entitled to a
share UNLESS the child was omitted because decedent:
a) did not know of the child’s existence; OR
b) believed the child to be dead.
M.
Will Contests
M
Testamentary Capacity – Testator must be capable of
knowing and understanding the:
1) Nature and extent of his property;
2) Natural objects of his bounty (relatives/friends);
AND
3) Disposition he is making.
*Appointment of a conservator or guardian does not
automatically establish a lack of testamentary capacity.
H
Undue Influence – When a person exerts influence
that overcomes a testator’s free will and judgment.
− A will is invalid to the extent executed under
undue influence.
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WILLS & ESTATES
Undue Influence is established when:
1) Testator had a weakness that made him
susceptible to influence (physical, mental,
financial);
2) Wrongdoer had access and opportunity to
exert the influence;
3) Wrongdoer actively participated in the drafting
the will; AND
4) An unnatural (unexpected) result occurred.
Common Law Presumption → Undue Influence
established if:
1) A confidential relationship (between testator and
wrongdoer);
2) Wrongdoer actively participated in the drafting of
the will; AND
3) An unnatural result occurred.
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Fraud – Fraud is established when:
1) a person knowingly makes a material
misrepresentation of fact;
2) with intent to induce reliance; AND
3) induces reliance to the testator’s detriment.
*A will is invalidated to the extent affected by the fraud.
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N.
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Standing to Challenge a Will – Standing exists if that
person:
a) is a beneficiary;
b) should be a beneficiary; OR
c) would be financially benefited if the decedent
died without a will.
Joint Bank Account – Co-tenants of a joint bank
account have a right of survivorship → automatic
entitlement to the funds upon the death of the other
person.
− Convenience Account Exception → the right
of survivorship may be overcome by showing
the account was set-up only for the
convenience of the parties (i.e. to pay
someone’s bills).
L
Totten Trust – A bank account with a named
beneficiary.
− If a beneficiary survives the account holder, the
funds automatically vest to the beneficiary.
Totten Trusts are Revocable when the Creator:
a) Withdraws all funds;
b) Delivers a signed, written, and acknowledged
revocation to the bank (must name the bank
and a new beneficiary); OR
c) Has a provision in his will that (i) contains an
express direction concerning the account, and
(ii) it specifically names the beneficiary and the
bank.
M
Life Insurance Beneficiary
− Policyholder has the power to change
beneficiaries during their lifetime.
▪ Exception → Need beneficiary’s consent
if it’s an irrevocable beneficiary.
− A beneficiary change is generally NOT permitted
through a will or testamentary instrument; it must
be changed on the policy directly.
L
Inter Vivos Gifts – Are gifts made during the donor’s
lifetime.
No-Contest Clause – Penalizes an interested person
for contesting the will or instituting other proceedings
relating to the estate.
− Valid in Most States, BUT courts will not enforce
the clause if probable cause exists for instituting
proceedings to challenge a will.
A No-Contest Clause DOES NOT apply when:
a) A good basis for the challenge exists plus
either (a) fraud, or (b) a subsequent will
revoked the will being probated;
b) The contest is on behalf of a minor or
incompetent;
c) The contesting party alleges that the court does
not have jurisdiction; OR
d) Merely asking the court to interpret/construe
the will’s terms.
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Non-Probate Transfers
M
Two Types of Fraud:
Fraud in the Inducement → deceit regarding facts
related to the instrument (i.e. property or beneficiaries).
Fraud in the Execution → deceit regarding nature of
the document being signed (i.e. that the document was
something other than a will).
M
Modification of a Will Due to Mistake
Most Courts → permit a modification to conform with
the testator’s intent if there is clear and convincing
evidence of a mistake.
UPC → court may modify a will if there is clear and
convincing evidence of a mistake EVEN IF it’s an
unambiguous provision (but extrinsic evidence is not
allowed).
A valid inter vivos gift occurs when:
1) a donor with intent to make a gift,
2) delivers the gift (may be constructive by giving
means of control/ownership of the gift); AND
3) the donee accepts the gift.
*Delivery of real property requires delivery of the deed.
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WILLS & ESTATES
Invasion of Non-Probate Assets to Pay Creditors – If
a decedent’s estate is inadequate to pay creditors, those
who receive non-probate assets may be liable to pay the
decedent’s creditors up to the value of the asset.
− Two or more transferees are severally liable.
− A creditor is generally NOT allowed to attach
inter vivos gifts (gifts made by the decedent prior
to death).
O.
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Powers & Duties of Personal Representatives
Personal Representative – A personal representative
(i.e. executor) must handle all the matters associated
with probate.
If decedent DOES NOT name an executor, the court will
appoint one in the following order of priority:
1) Surviving spouse who is a devisee
2) Another devisee
3) Surviving spouse
4) Other heirs
5) Any creditor (if 45 days have passed since
death)
M
Insulation of Agent’s Liability – A person is insulated
from civil & criminal liability for health–care decisions
made in good faith under a Durable Health-Care Power
of Attorney.
M
Family Consent Laws – An adult may designate any
individual to act as a surrogate to make decisions by
personally informing the supervising health care
provider.
When NO designation is made, these family member(s)
may act as surrogate when a patient lacks capacity (in
order of priority):
1) spouse (unless legally separated)
2) adult child
3) parent
4) adult sibling
5) if none of the above → an adult who has
exhibited special care and concern, is familiar
with patient’s personal values, and is readily
available.
*If there are multiple members in the same class, then a
majority must agree on a health-care decision.
P. Living Wills & Durable Health Care Powers
M
Durable Health-Care Power of Attorney – Gives a
designated agent the power to make health care
decisions in the event of the principal’s incapacity.
− Must be → (1) in a signed writing; AND (2)
witnessed or notarized.
− An agent’s power is NOT limited unless stated
otherwise.
M
Advanced Directive (Living Will) – Specifies the
patient’s preferences for treatment or non-treatment in
the event of the patient’s incapacity.
− Must be → (1) in a signed writing; AND (2)
witnessed or notarized.
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