MEE Priority Outline (SmartBarPrep - July 2019)

Essay Priority Outline For the UBE/MEE July 2019 Edition Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 DISCLAIMER The SmartBarPrep Essay Priority Outline (hereinafter “Study Guide”) is designed to assist you in studying for the Uniform Bar Exam (‘UBE”) and/or Multistate Essay Exam (“MEE”) essays. 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 essay questions, there is NO GUARANTEE that any future exam will test the same or similar subjects, rules, and/or topics that have appeared on past exams. SmartBarPrep makes NO WARRANTIES or GUARANTEES as to what legal rules the National Conference of Bar Examiners and/or state bar examiners will test on any future Uniform Bar Exam, Multistate Essay Exam, or state’s bar exam. While we endeavor to provide accurate, complete, and up-to-date information in this Study Guide, the accuracy, completeness, adequacy, or currency of the content is not guaranteed. Your use of any content in this Study Guide or materials linked from our website (www.smartbarprep.com) is at your own risk. Although SmartBarPrep does feel that using this Study Guide will help you on the UBE and MEE, WE MAKE NO GUARANTEE THAT YOU WILL PASS THE UNIFORM BAR EXAM, MULTISTATE ESSAY EXAM, OR ANY OTHER STATE’S BAR EXAM. Under no circumstances shall we be liable for any losses or damages whatsoever, including direct, indirect, incidental, and consequential damages, resulting from the use of this Study Guide, whether based on contract, tort, or any other legal theory. This Study Guide and the materials contained herein are provided “as is,” and there are no representations or warranties, express or implied, with respect to the use of this Study Guide, or its contents. WE EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND WITH RESPECT TO ITS USE, INCLUDING BUT NOT LIMITED TO MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. The content of this Study Guide is not intended to and does not constitute legal advice, nor is it intended to establish any attorney-client relationship. Reading beyond this point constitutes your acceptance of the terms above. Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 We would love to hear from you. If you have any questions, comments, or suggestions please feel free to email us at any time. contact@smartbarprep.com © 2019 SmartBarPrep | www.smartbarprep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 UBE/MEE Priority Outline Rule Layout Each rule in the SmartBarPrep Essay Priority Outline is presented as shown in the sample below. SAMPLE The title of the rule will be in bold (ex: Bylaws). Bylaws The Rule Statement (ex: The Bylaws are the rules and regulations adopted by …) will be in one or more bullet points under the Rule Title. The right sidebar lists the exams that the rule was tested. The right sidebar is also ideal for note taking when reviewing the outline. © 2019 SmartBarPrep | www.smartbarprep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 UBE/MEE Priority Outline Guide to the Frequency & Priority Ratings Frequency Ratings To the left of the Rule Statement is the frequency in which the rule was tested on past Multistate Essay Exams (ex: 1 of 49 exams). Priority Ratings Rating s In addition, a priority rating (HIGH, MED, or LOW) will be listed in the color-coded circle next to each rule.  HIGH = High Priority (these are the most important and frequently tested rules)  MED = Medium Priority (these rules are tested slightly less frequently, but are still important)  LOW = Low Priority (these rules have been tested the least) The purpose of providing the HIGH/MED/LOW priority rating and the frequency is so you can see how often each rule has been tested compared to the other rules at a glance, and prioritize your studying to focus on the most important and frequently tested rules rules first and foremost before moving onto the less important ones. The priority ratings are based upon how often that rule has been tested in the past for that particular subject area. Generally, the ratings are based on the following methodology: Subject Frequency & Priority 1 - Agency 2 - Partnerships HIGH = 4+ exams 3 - Corporations & LLC’s MED = 2 or 3 exams 4 - Civil Procedure LOW = 0 or 1 exams 10 - Family Law 12 - Secured Transactions 14 - Trusts & Future Interests These subjects have been tested on 49 exams. 15 - Wills & Estates HIGH = 3+ exams 5 - Conflict of Laws MED = 2 exams LOW = 0 or 1 exams Conflict of Laws has been tested on 49 exams. © 2019 SmartBarPrep | www.smartbarprep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 UBE/MEE Priority Outline Subject Frequency & Priority HIGH = 2+ exams 6 - Constitutional Law MED = 0 or 1 exams 7 - Contracts 8 - Criminal Law & Procedure These subjects have been tested on 24 exams.1 9 - Evidence 11 - Real Property There are no LOW priority ratings 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. 13 - Torts For the same reasons, the outline includes additional rules that we felt were important, but have been not been tested on the essays to date for these six subjects. Although a rule with the rating of LOW or MED 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 MED, MED or LOW designation is NOT A PREDICTION OF WHAT RULES WILL APPEAR ON ANY GIVEN EXAM. Instead, we have given each rule a priority designation based on how often that particular rule has shown up on past Multistate Essay Exams. 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. The purpose of providing the HIGH/MED HIGH MED/LOW MED LOW priority rating and the frequency with which rules have appeared is so you can see how often each rule has been tested as compared to the other rules at a glance, and prioritize your studying to focus on the most important and frequently tested rules first before moving onto the less important ones. Ultimately, this method promotes efficiency in studying for the bar exam. Best of luck on the exam! – The SmartBarPrep Team 1 The subject of Sales (UCC Article 2) was tested on a few exams prior to July 2007; these rules have been included in the Contracts subject. © 2019 SmartBarPrep | www.smartbarprep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Table of Contents 1. AGENCY1 A. Agency Relationships 1 • Creation of Agency Relationship�� 1 • Types of Agency Relationships�� 1 • Termination of Agency Relationship�� 1 B. Contractual Liability of Principal and Agent 2 • Actual Authority�� 2 • Apparent Authority�� 2 • Inherent Agency Power�� 3 • Ratification of Agent’s Contracts�� 4 • Agent’s Contractual Liability�� 4 C. Vicarious Liability of Principal for an Agent’s Torts 5 • Employee vs. Independent Contractor�� 6 • Vicarious Liability of Employer: Doctrine of Respondeat Superior�� 7 • Vicarious Liability of Employer: Liability Where Respondeat Superior Doctrine Inapplicable�� 7 • Vicarious Liability for Acts of Independent Contractors�� 8 D. Fiduciary Duties Between Principal and Agent 8 • Fiduciary Duties Owed by the Agent to the Principal�� 8 2. PARTNERSHIPS9 A. Creation of Partnerships 9 • Creation of a General Partnership�� 9 • Formation of a Limited Partnership (LP)�� 9 • Formation of a Limited Liability Partnership (LLP)�� 10 B. Power and Liability of Partners 10 • Authority to Bind the Partnership �� 10 • Authority to Bind a Partnership After Dissolution�� 11 • Personal Liability of General Partners & Judgment Enforcement�� 11 • Personal Liability of Limited Partners�� 12 • Personal Liability of Limited Liability Partners�� 14 C. Rights of Partners Among Themselves 14 • Sharing of Profits and Losses�� 14 • Right to Management & Control�� 14 • Transfer of Ownership Interest in a Partnership�� 14 • Right to Partnership Property�� 15 • Remuneration (Payment for Partner’s Services)�� 15 • Partnership Ownership of Inventions�� 16 • Advance of Funds to the Partnership & Reimbursement�� 16 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 i D. Special Rules Concerning Limited Partnerships 16 • Management & Control in a Limited Partnership�� 16 • Limited Partner’s Right to Inspect Records�� 16 E. Duties Owed by Partners 17 • Duty of Care�� 17 • Duty of Loyalty�� 17 • Duty to Provide Full Information�� 18 • Action Against a Partner for Misconduct�� 18 F. Dissociation and Dissolution 19 • Dissociation (Withdrawal of a Partner)�� 19 • Dissolution of a General Partnership�� 19 • Dissolution of a Limited Partnership�� 21 • Winding Up & Termination of the Partnership�� 21 3. CORPORATIONS & LLC’S 22 A. Formation of a Corporation 22 • Formation of a Corporation (Articles of Incorporation)�� 22 • Bylaws�� 22 • Amending the Bylaws�� 23 • Powers of a Corporation�� 23 B. Formation of a Limited Liability Company (LLC) 23 • Formation of an LLC�� 23 C. Pre-Formation Contract Liability 24 • Liability of Promoter for Pre-Incorporation Contracts�� 24 • Liability of Corporation for Pre-Incorporation Contracts �� 24 • Defective Incorporation & Owner Liability�� 24 D. Personal Liability & Piercing the Veil 25 • Personal Liability & Piercing the Veil�� 25 E. Corporate Finance 26 • Common & Preferred Shares�� 26 • Authorized, Outstanding, & Reacquired Shares�� 27 • Consideration in Exchange for Shares�� 27 • Dividends & Distributions to Shareholders�� 28 F. Shareholders 28 • Shareholder Meetings: Right to Vote & Record Date�� 28 • Shareholder Meetings: Proxy Voting & Revocation of a Proxy�� 29 • Shareholder Meetings: Annual Meetings, Special Meetings, & Notice�� 29 • Shareholder Meetings: Quorum & Voting�� 30 • Shareholder Meetings: Election of Directors�� 30 • Shareholder’s Right to Inspect Books and Records�� 31 • Shareholder Voting Agreements�� 31 G. Directors 31 • Board of Directors Meeting: Quorum�� 31 • Board of Directors Meeting: Voting & Objection to Actions �� 32 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 ii • Board of Directors Meeting: Notice & Waiver�� 32 • Board Action by Written Consent�� 32 • Removal of Directors�� 33 H. Officers 33 • Authority of Officers�� 33 • Removal of Officers�� 34 I. Members & Managers 34 • Management of an LLC�� 34 • Authority of Members and Managers of an LLC�� 34 J. Close Corporations & Control Devices 35 • Preemptive Rights�� 35 • Restrictions on Share Transfers�� 36 K. Fiduciary Duties 36 • Fiduciary Duties of Directors: Duty of Care�� 36 • Fiduciary Duties of Directors: Duty of Loyalty�� 37 • Fiduciary Duties of Shareholders�� 38 • Restricting/Eliminating Fiduciary Duties in a Corporation�� 38 • Fiduciary Duties Owed by Members/Managers of an LLC�� 38 • Restricting/Eliminating Fiduciary Duties in an LLC�� 39 L. Shareholder & Member Litigation 40 • Direct & Derivative Actions�� 40 • Derivative Actions: Dismissal by the Board of Directors�� 41 • Federal Securities Law – Rule 10b-5�� 41 M. Fundamental Corporate Changes 42 • Amending the Articles of Incorporation�� 42 • Mergers and Share Exchanges�� 42 • Sale of All or Substantially All of Corporate Assets�� 43 • Dissenter’s Appraisal Rights for Fundamental Changes�� 43 N. Dissolution & Dissociation 44 • Judicial Dissolution of a Corporation�� 44 • Voluntary Dissolution of a Corporation�� 44 • Dissociation of a Member from an LLC�� 45 • Dissolution & Winding Up of an LLC�� 46 4. CIVIL PROCEDURE 47 A. Federal Subject Matter Jurisdiction 47 • Subject Matter Jurisdiction: Federal Question�� 47 • Subject Matter Jurisdiction: Diversity of Citizenship�� 47 • Subject Matter Jurisdiction: Supplemental Jurisdiction�� 49 • Subject Matter Jurisdiction: Domestic Relations Exception�� 49 B. Removal 50 • Removal�� 50 C. Abstention Doctrines 50 • Abstention Doctrines�� 50 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 iii D. Personal Jurisdiction 51 • Personal Jurisdiction�� 51 E. Service of Process and Notice 53 • Service of Process and Notice�� 53 F. Venue 54 • Venue (Proper Venue & Transfer of Venue)�� 54 G. Law Applied by Federal Courts 55 • Law Applied by Federal Courts: Erie Doctrine, Substance vs. Procedure, & Supremacy Clause�� 55 H. Preliminary Injunctions & Temporary Restraining Orders 56 • Preliminary Injunction �� 56 • Temporary Restraining Order (TRO)�� 57 I. Pleadings 57 • Amendments to Pleadings & Relation Back Doctrine�� 57 • Counterclaims�� 58 • Cross-Claims�� 59 J. Rule 11 59 • Rule 11 – Representations to the Court�� 59 • Rule 11 – Sanctions Imposed�� 60 • Rule 11 – Procedure for Filing a Sanctions Motion�� 61 K. Joinder of Parties and Claims 61 • Permissive Joinder of Parties�� 61 • Required Joinder of Parties�� 61 • Intervention as of Right & Permissive Intervention�� 62 • Impleader (Third-Party Actions)�� 63 • Class Action Requirements & Certification�� 63 L. Discovery 64 • Discoverable Information (Relevant & Proportional Standard)�� 64 • Depositions�� 64 • Electronically Stored Information & Spoliation Sanctions�� 65 • Rule 26(g) – Signing Disclosures & Sanctions for Improper Certification�� 65 • Rule 26(a) Initial Disclosures�� 66 • Attorney Work Product Doctrine �� 66 M. Pretrial Conference and Order 67 • Pretrial Conference and Order�� 67 N. Motions 68 • Motion to Dismiss & Motion for Judgment on the Pleadings�� 68 • Motion for Summary Judgment�� 69 • Motion for Judgment as a Matter of Law�� 69 • Motion for a New Trial�� 70 O. Verdicts and Judgments 71 • Preclusive Effect of a Default Judgment�� 71 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 iv P. Claim Preclusion & Issue Preclusion 71 • Claim Preclusion (Res Judicata)�� 71 • Issue Preclusion (Collateral Estoppel)�� 72 Q. Appeals 72 • Appeals: Final Judgment Rule & Exceptions�� 72 5. CONFLICT OF LAWS 75 A. Choice of Law Theories 75 • Choice of Law Theories: Traditional Vested Rights Approach�� 75 • Choice of Law Theories: Most Significant Relationship Approach �� 75 • Choice of Law Theories: Interest Analysis Approach�� 75 B. Application in Specific Areas 76 • Choice of Law Rules: Torts�� 76 • Choice of Law Rules: Contracts�� 77 • Choice of Law Rules: Contractual Forum-Selection Clause�� 78 • Choice of Law Rules: Premarital Agreements�� 78 • Choice of Law Rules: Real Property Cases�� 78 • Choice of Law Rules: Inheritance of Real & Personal Property�� 79 C. Law Applied by Federal & State Courts 79 • Law Applied by Federal Courts: Erie Doctrine, Substance vs. Procedure, & Supremacy Clause�� 79 • Law Applied by State Courts: Substance vs. Procedure�� 80 D. Recognition & Enforcement of Judgments 80 • Full Faith and Credit: State, Federal, and Foreign Court Judgments�� 80 • Full Faith and Credit: Ceremonial & Common Law Marriage�� 81 • Full Faith and Credit: Family Law Judgments�� 81 6. CONSTITUTIONAL LAW 83 A. Constitutional Limits on Federal Court Jurisdiction 83 • State Sovereign Immunity (11th Amendment)�� 83 B. Justiciability 83 • Standing�� 83 • Advisory Opinions, Ripeness, & Mootness�� 84 C. Powers of Congress 85 • Commerce Clause�� 85 • Power to Enforce the 13th, 14th, and 15th Amendments�� 85 • Taxing Power�� 86 • Spending Power�� 86 D. Powers of the President 86 • Executive Powers: Domestic Powers�� 86 • Executive Powers: Treaty and Foreign Affairs Powers�� 87 E. Federal Interbranch Relationships 87 • Delegation of Congressional Powers & Non-Delegation Doctrine�� 87 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 v F. Intergovernmental Immunities 87 • State Immunity from Federal Law (10th Amendment)�� 87 G. Federalism-Based Limits on State Authority 88 • Negative Commerce Clause�� 88 • Supremacy Clause & Preemption�� 89 H. Governmental Action 89 • Governmental Action (“State Action”)�� 89 I. Due Process (5th & 14th Amendments) 90 • Substantive Due Process�� 90 • Procedural Due Process�� 90 J. Equal Protection (5th & 14th Amendments) 91 • Equal Protection Analysis�� 91 K. Takings (5th Amendment) 92 • Takings (5th Amendment)�� 92 L. Other Protections 93 • Privileges and Immunities Clause�� 93 M. Freedom of Religion 94 • Freedom of Religion: Establishment Clause�� 94 • Freedom of Religion: Free Exercise Clause�� 94 N. Freedom of Speech 95 • Freedom of Speech: Content-Based vs. Content-Neutral Restrictions�� 96 • Freedom of Speech: Public Forum, Limited Public Forum, & Non-Public Forum�� 96 • Unprotected Speech: Fighting Words�� 98 • Unprotected Speech: Incitement of Imminent Lawless Action�� 98 • Unprotected Speech: Obscenity�� 99 • Freedom of Speech: Regulation of Commercial Speech�� 99 • Freedom of Speech: Public School Students�� 99 • Freedom of Speech: Government Employees�� 100 • Freedom of Speech: Regulation of Expressive Conduct�� 101 • Freedom of Speech: Prior Restraint�� 101 • Freedom of Speech: Vague & Overbroad Laws �� 101 O. Freedom of the Press 102 • Freedom of the Press: Defamation & Actual Malice Standard�� 102 • Freedom of the Press: Disclosure of Private Facts & Generally Applicable Laws�� 102 P. Freedom of Association 103 • Freedom of Association�� 103 7. CONTRACTS104 A. Formation of Contracts 104 • UCC Article 2 Governs Contracts for the Sale of Goods�� 104 • Applicable Law: UCC Article 2 vs. Common Law�� 105 • Mutual Assent: Offer & Acceptance�� 105 • Mutual Assent: Timing of Acceptance/Revocation & the Mailbox Rule�� 106 • Mutual Assent: Battle of the Forms (Mirror Image Rule and UCC Exception)�� 107 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 vi • • • • • Mutual Assent: Implied-in-Fact Contracts�� 107 Indefiniteness or Absence of Terms�� 107 Consideration: Bargained for Exchange & Substitutes�� 108 Consideration: Settlement/Release of Legal Claims�� 109 Modification of Contracts: Pre-Existing Duty Rule & Exceptions�� 109 B. Defenses to Enforceability 109 • Incapacity�� 109 • Duress�� 110 • Undue Influence�� 110 • Mutual Mistake & Unilateral Mistake�� 110 • Misrepresentation�� 111 • Illegality & Public Policy�� 112 • Unconscionability�� 112 • Statute of Frauds: Contracts Requiring a Signed Writing�� 112 C. Contract Content & Meaning 114 • Parol Evidence Rule�� 114 D. Performance, Breach, & Discharge 114 • Condition Precedent�� 114 • Implied Obligation of Good Faith and Fair Dealing�� 115 • Impossibility, Impracticability, & Frustration of Purpose�� 115 • Minor Breach (Substantial Performance Doctrine) vs. Material Breach�� 116 • Divisible Performance (Part Performances as Agreed Equivalents)�� 116 • UCC Perfect Tender Rule & Exceptions�� 117 • UCC Acceptance of Goods & Revocation of Acceptance�� 117 • Anticipatory Repudiation & Adequate Assurances�� 118 • Accord and Satisfaction�� 118 E. Warranties in Sales of Goods Contracts 119 • Express Warranty�� 119 • Implied Warranty of Merchantability�� 119 • Implied Warranty of Fitness for a Particular Purpose�� 119 • Warranty of Title�� 120 • Limiting Damages for Breach of Warranty�� 120 F. Third-Party Rights 120 • Third-Party Beneficiaries & Enforcement of Rights�� 120 • Assignment of Rights�� 121 • Delegation of Duties�� 122 G. Remedies 122 • Common Law Expectation Damages�� 122 • Consequential Damages�� 123 • Punitive Damages�� 123 • Specific Performance�� 123 • UCC Seller’s Remedies & Damages�� 123 • UCC Buyer’s Remedies & Damages�� 124 • Waste Doctrine & Diminution in Value Damages�� 124 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 vii • Restitution (Unjust Enrichment)�� 125 • Rescission�� 125 • Mitigation of Damages�� 125 8. CRIMINAL LAW & PROCEDURE 126 A. General Principles 126 • Elements of a Crime: Acts and Omissions�� 126 • Elements of a Crime: Causation�� 126 • Elements of a Crime: Mental States�� 127 B. Homicide 128 • Murder�� 128 • Manslaughter�� 128 C. Other Crimes 129 • Theft Crimes & Receiving Stolen Property�� 129 • Robbery�� 130 • Burglary�� 130 • Rape & Statutory Rape�� 130 • Assault and Battery�� 131 • Kidnapping & False Imprisonment�� 131 • Arson�� 131 • Criminal Possession Offenses�� 132 D. Inchoate Offenses 132 • Attempt�� 132 • Conspiracy�� 132 • Solicitation�� 133 E. Parties to a Crime 133 • Accomplice Liability �� 133 F. Defenses 134 • Duress�� 134 • Insanity�� 135 • Justification: Self-Defense & Defense of Others�� 135 • Intoxication�� 136 • Mistake of Fact or Law�� 136 G. Arrest, Search, and Seizure (4th Amendment) 137 • Fourth Amendment Right – Government Action & Standing�� 137 • Arrests�� 138 • Request for Information, Stop and Inquire, & Stop and Frisk�� 138 • Warrant Requirement for All Searches, Unless an Exception Applies�� 139 • Exception to Warrant Requirement: Plain View Doctrine�� 139 • Exception to Warrant Requirement: Exigent Circumstances�� 140 • Exception to Warrant Requirement: Automobile Exception�� 140 • Exception to Warrant Requirement: Search Incident to Arrest�� 140 • Exception to Warrant Requirement: Consent�� 140 • Exception to Warrant Requirement: Inventory Search�� 141 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 viii H. Confessions, Privilege Against Self-Incrimination, and Right to Counsel 141 • Confessions: 14th Amendment Due Process Clause�� 141 • Confessions: 5th Amendment Privilege Against Self-Incrimination & Miranda Rights�� 141 • Confessions: 6th Amendment Right to Counsel�� 143 • Right to Counsel & Effective Assistance of Counsel at Trial�� 144 I. Line-ups & Police-Arranged Identification Procedures 144 • Line-Ups & Police-Arranged Identification Procedures�� 144 J. Exclusionary Rule & the Fruit of the Poisonous Tree Doctrine 145 • Exclusionary Rule & the Fruit of the Poisonous Tree Doctrine�� 145 K. Fair Trial and Guilty Pleas 146 • Right to a Jury Trial �� 146 • Competence to Stand Trial�� 146 L. Double Jeopardy 147 • Double Jeopardy�� 147 M. Burden of Proof and Persuasion 147 • Burden of Proof, Presumptions, & Sufficiency of Evidence�� 147 N. Appeal and Error 148 • Harmless Error Rule�� 148 9. EVIDENCE149 A. Probative Value 149 • Probative Value: Relevancy & Rule 403 Exclusions�� 149 B. Policy Exclusions 149 • Subsequent Remedial Measures�� 149 • Compromise/Settlement Offers & Negotiations�� 150 • Pleas & Plea Negotiations�� 150 • Offers to Pay Medical Expenses�� 150 • Liability Insurance�� 150 C. Physical and Documentary Evidence 151 • Authentication of Evidence�� 151 • Best Evidence Rule�� 151 D. Character Evidence & Related Concepts 151 • Character Evidence�� 151 • Prior Bad Acts�� 153 • Habit or Routine Practice�� 153 E. Impeachment 154 • Impeachment: Prior Inconsistent Statements�� 154 • Impeachment: Prior Convictions�� 154 • Impeachment: Specific Instances of Conduct�� 155 • Impeachment: Character for Truthfulness�� 155 • Impeachment: Ability to Observe, Remember, or Relate Accurately�� 155 • Impeachment: Hearsay Declarants�� 155 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 ix F. Presentation of Evidence 156 • Refreshing Recollection�� 156 • Judicial Notice�� 156 • Lay Witness Testimony & Opinions�� 156 • Expert Witness Testimony�� 157 G. Hearsay 157 • Hearsay, Multiple Hearsay, & Non-Hearsay�� 157 • Hearsay Exclusion: Statements by a Party Opponent�� 158 • Hearsay Exclusion: Prior Statements by a Witness�� 158 • Hearsay Exception: Present Sense Impression�� 158 • Hearsay Exception: Excited Utterance�� 158 • Hearsay Exception: Business Records�� 159 • Hearsay Exception: Statements Made for Medical Diagnosis/Treatment �� 159 • Hearsay Exception: Statements of Mental, Emotional, or Physical Condition�� 159 • Hearsay Exception: Dying Declaration�� 159 • Hearsay Exception: Statement Against Interest�� 160 • Hearsay Exception: Public Records�� 160 • Hearsay Exception: Past Recollection Recorded�� 160 • Sixth Amendment Right to Confront Witnesses�� 161 H. Privileges 161 • Spousal Privileges: Spousal Immunity & Confidential Marital Communications�� 161 • Attorney-Client Privilege�� 162 • Attorney Work Product Doctrine�� 162 • Physician-Patient Privilege�� 162 • Psychotherapist-Patient Privilege�� 163 10. FAMILY LAW 164 A. Getting Married 164 • Marriage Requirements (State of Mind & Procedural)�� 164 • Common Law Marriage�� 164 • Bigamous Marriage�� 164 B. Premarital Agreements 165 • Premarital Agreements: Enforceability�� 165 • Premarital Agreements: Child Custody & Support�� 166 • Premarital Agreements: Spousal Support�� 166 • Premarital Agreements: Eliminating Fundamental Marital Duties & Allocating Financial Responsibilities�� 166 C. Being Married 166 • Rights & Responsibilities of Spouses: Married Women’s Property Acts�� 166 • Rights & Responsibilities of Spouses: Payment for Necessities �� 167 D. Jurisdiction & Recognition of Decrees in Marital Actions 167 • Jurisdiction: Marital/Divorce & Support Actions�� 167 • Jurisdiction: Child Custody & Adoption Matters�� 168 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 x E. Divorce, Annulment, Separation, & Dissolution 169 • Annulment�� 169 • Divorce Grounds�� 169 • Setting Aside Separation & Divorce Settlement Agreements�� 170 F. Division of Property 170 • Division of Property: Marital vs. Separate Property�� 170 • Division of Property: Professional License or Degree�� 171 • Division of Property: Marital & Economic Fault�� 171 • Division of Property: No Termination Upon Death�� 171 • Modification of a Property Division Award�� 172 G. Spousal & Child Support 172 • Spousal Support: When Support May be Awarded, Amount, & Termination�� 172 • Spousal Support: Reinstatement of Prior Award �� 173 • Child Support�� 173 • Modification & Enforcement of Child/Spousal Support Orders�� 173 H. Child Custody & Visitation 174 • Child Custody: Best Interests of the Child Standard�� 174 • Child Custody: Parent vs. Third-Party Custody�� 174 • Child Custody: Joint Custody�� 175 • Child Custody: Presumption of Parental Fitness�� 175 • Visitation: Parental Visitation Rights �� 175 • Visitation: Third-Party Visitation Rights�� 175 • Child Custody: Relocation of the Custodial Parent & Child�� 176 • Modification of a Child Custody Order�� 176 I. Rights of Unmarried Cohabitants 177 • Division of Property of Unmarried Cohabitants�� 177 • Agreements Between Unmarried Cohabitants�� 177 • Putative Spouse Doctrine�� 177 J. Unmarried Parents & Their Children 178 • Establishing Paternity, Presumption of Legitimacy, & Paternity by Estoppel�� 178 • Unmarried Biological Father’s Rights�� 178 K. Parent, Child, & State 179 • Right to Control the Child’s Upbringing�� 179 • Intra-Family Lawsuits & Immunities�� 179 • Loss of Consortium Claims�� 179 L. Adoption 180 • Adoption & Parental Consent�� 180 • Adoption: Visitation for Biological Parents �� 180 M. Alternatives to Adoption 181 • Artificial Insemination & In Vitro Fertilization�� 181 • Surrogacy Arrangements �� 181 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 xi 11. REAL PROPERTY 182 A. Present Estates & Future Estates 182 • Present Estates: Fee Simple Absolute & Fee Tail�� 182 • Present Estates: Defeasible Fees�� 182 • Present Estates: Life Estate�� 183 • Present Estates: Statute of Limitations�� 183 • Future Estates: Reverter & the Right of Re-Entry�� 183 • Future Estates: Vested and Contingent Remainders�� 184 B. Co-Tenancy 184 • Tenancy in Common�� 184 • Joint Tenancy: Formation�� 185 • Joint Tenancy: Severance�� 185 • Co-Tenant’s Entitlement to Rent or Reimbursement for Repairs/Improvements�� 185 C. Landlord & Tenant Issues 186 • Types of Leasehold Interests�� 186 • Tenant Duties: Duty to Pay Rent�� 187 • Landlord’s Rights and Liabilities Concerning a Hold-Over Tenant�� 187 • Landlord Duties: Implied Warranty of Habitability �� 188 • Landlord Duties: Constructive Eviction �� 188 • Landlord Duties: Duty to Mitigate Damages �� 189 • Assignment of a Lease�� 189 • Subleases�� 190 • Termination of Leases: Surrender�� 190 D. Covenants & Equitable Servitudes 191 • Real Covenants�� 191 • Equitable Servitudes�� 191 • Common Scheme or Plan Doctrine (Reciprocal Negative Servitude)�� 192 • Restrictive Covenants: Common Interest Ownership Communities & Property Owner Associations�� 192 E. Easements & Licenses 193 • Easements by Grant, Prescription, Implication, & Necessity�� 193 • Scope of an Easement�� 194 • Termination of an Easement�� 194 • Licenses�� 195 F. Fixtures 195 • Fixtures�� 195 G. Adverse Possession 195 • Adverse Possession�� 195 H. Land Conveyances 196 • Requirements for a Valid Land Sale Contract�� 196 • Warranty of Marketable Title�� 196 • Warranty of Marketable Title: Damages Recoverable�� 197 • Doctrine of Equitable Conversion & Risk of Loss�� 197 • Time of Performance for Real Estate Contracts�� 198 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 xii • Action for Specific Performance of Real Property�� 198 • Home Builder’s Implied Warranty�� 198 I. Title to Real Property 199 • Deed Requirements�� 199 • General Warranty Deed, Special Warranty Deed, & Quitclaim Deed�� 199 • Estoppel by Deed�� 200 • Chain of Title and Wild Land Records�� 200 • Recording Statutes & Notice�� 200 • Bona Fide Purchasers & The Shelter Rule�� 201 • Owner by Adverse Possession vs. Subsequent Bona Fide Purchasers �� 201 • Deeds: Drafting, Review, and Negotiation of Closing Documents�� 202 • Deeds: Persons Authorized to Execute Real Estate Documents�� 202 J. Mortgages/Security Devices 202 • Mortgages & Requirements for a Valid Mortgage�� 202 • Purchase Money Mortgage�� 203 • Future-Advance Mortgage�� 203 • Deed of Trust�� 203 • Assumption & Transfer Subject to a Mortgage�� 204 • Mortgages: Foreclosure, Order of Preference, and Deficiency Judgments�� 204 • Transfer of a Mortgage Note�� 204 K. Zoning 205 • Zoning Ordinances�� 205 • Zoning Ordinances: Variances�� 205 • Zoning Ordinances: Previous Non-Conforming Use�� 205 L. Conflict of Laws 205 • Choice of Law Rules: Real Property Cases�� 205 12. SECURED TRANSACTIONS 207 A. Applicability & Scope of Article 9 of the UCC 207 • Article 9 of the UCC Governs Secured Transactions�� 207 • Scope of Article 9 of the UCC: Substance Over Form Controls�� 207 B. Definitions 208 • Types of Collateral: Accounts �� 208 • Types of Collateral: Deposit Accounts �� 208 • Types of Collateral: Inventory�� 208 • Types of Collateral: Equipment�� 208 • Types of Collateral: Consumer Goods�� 209 • Types of Collateral: Proceeds�� 209 • Types of Collateral: Chattel Paper�� 209 C. Attachment and Perfection 209 • Attachment and Perfection�� 209 • Financing Statements�� 210 • No Interest Retained in a Payment Right Sold & Rights/Title with Respect to Creditors and Purchasers�� 211 • Purchase Money Security Interests (PMSI’s)�� 211 • Automatic Perfection for Certain Assignment of Accounts�� 211 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 xiii D. Validity of Security Agreements & Rights of Parties 212 • Security Interest in the Sale of Collateral & Identifiable Proceeds�� 212 • Consignment�� 212 • Control of a Deposit Account�� 213 • Future Advances�� 213 E. Protection of a Buyer of Goods 213 • Transfers of Collateral & The Shelter Principle�� 213 • Buyers in the Ordinary Course of Business �� 213 • Consumer-to-Consumer Rule�� 214 F. Priorities 214 • Priority for Perfected Interests & Unperfected Interests�� 214 • Priority of Liens Arising by Law�� 215 • Priority of Judgment Lien Creditors�� 215 • Fixtures�� 215 G. Accessions 216 • Accessions & Commingling�� 216 H. Secured Party’s Rights & Remedies Upon Default 216 • Secured Party’s Right to Take Possession of Collateral �� 216 • Secured Party’s Right to Dispose of Collateral�� 216 • Right to Collect Directly from an Account Debtor�� 217 I. Debtor’s Rights Upon Default 218 • Damages Available to a Debtor for a Secured Party’s Failure to Comply with Applicable Rules�� 218 • Debtor’s Right of Redemption�� 218 • Deficiency Judgments�� 218 13. TORTS220 A. Intentional Torts 220 • Battery�� 220 • Assault�� 220 • False Imprisonment�� 221 • Intentional Infliction of Emotional Distress�� 221 • Trespass to Land�� 221 • Trespass to Chattels & Conversion�� 222 • Doctrine of Transferred Intent�� 222 • Intentional Tort Defenses: Consent�� 223 • Intentional Tort Defenses: Privileges�� 223 B. Negligence 224 • Prima Facie Case of Negligence�� 224 • Affirmative Duty to Act & Rendering Aid�� 224 • Standard of Care: Reasonable Person Standard�� 225 • Standard of Care: Children �� 225 • Standard of Care: Professionals�� 225 • Standard of Care: Land Owner/Possessor’s Duty to Entrants�� 226 • Standard of Care: Landlord’s Duty to Tenants�� 227 • Negligence Per Se�� 227 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 xiv • • • • Res Ipsa Loquitur�� 228 Causation: Actual and Proximate Cause�� 229 Proximate Cause: Intervening Causes�� 229 Causation: Eggshell Plaintiff Rule & Emotional Distress Stemming from Physical Injury�� 229 C. Defenses to Negligence Claims 230 • Comparative Negligence & Contributory Negligence�� 230 • Assumption of Risk�� 230 D. Negligent Infliction of Emotional Distress 230 • Negligent Infliction of Emotional Distress�� 230 E. Liability for Acts of Others (Vicarious Liability) 231 • Vicarious Liability of Employer: Doctrine of Respondeat Superior�� 231 • Vicarious Liability of Employer: Liability Where Respondeat Superior Doctrine is Inapplicable�� 232 • Employee vs. Independent Contractor�� 232 • Vicarious Liability for Acts of Independent Contractors�� 232 F. Liability of Multiple Defendants 233 • Joint and Several Liability�� 233 • Indemnification �� 233 • Contribution�� 233 • Doctrines of Alternative Liability, Joint Enterprise, & Market Share Liability�� 234 G. Economic & Dignitary Torts 234 • Defamation�� 234 • Invasion of Privacy Torts�� 236 • Intentional Interference with Business Relations�� 236 • Intentional & Negligent Misrepresentation�� 237 • Public and Private Nuisance�� 237 H. Common Law Strict Liability 238 • Strict Liability: Wild & Domestic Animals�� 238 • Strict Liability: Abnormally Dangerous Activity�� 238 I. Products Liability 238 • Strict Products Liability: Liability for Manufacturing Defect, Design Defect, & Failure to Warn�� 238 • Products Liability: Liability for Negligence�� 240 • Products Liability: Liability for Breach of Warranty�� 240 14. TRUSTS & FUTURE INTERESTS 241 A. Trust Creation 241 • Trust Formation Elements�� 241 • Precatory Language & Promises to Create a Trust�� 241 B. Types of Trusts 242 • Revocable & Irrevocable Trusts�� 242 • Testamentary Trusts�� 242 • Pour-over Provision in a Will�� 242 • Charitable Trusts�� 243 • Illusory Trusts�� 243 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 xv • Resulting Trusts�� 243 • Discretionary Trusts�� 243 • Support Trusts�� 244 C. How Trust Assets Pass 244 • How Trust Assets Pass�� 244 D. Cy Pres Doctrine 244 • Cy Pres Doctrine�� 244 E. Restraints on Alienation & Rights of Creditors 245 • Spendthrift Trusts�� 245 • Rights of Creditors�� 245 F. Powers of Invasion 246 • Powers of Invasion�� 246 G. Modification of a Trust 246 • Modification of a Trust�� 246 • Equitable Deviation Doctrine & Modification of Administrative and Dispositive Trust Provisions�� 247 • Additions Clause in a Trust�� 248 H. Termination of a Trust 248 • Termination of a Trust�� 248 • Distribution Upon Termination�� 248 • Conditions that Prohibit Marriage or Require Divorce�� 248 I. Powers & Duties of Trustees 249 • Trustee Duty to Administer the Trust�� 249 • Trustee Duty of Care: Prudent Administration, Take Control & Protect Trust Property�� 249 • Trustee Duty of Loyalty: Self-Dealing�� 249 • Trustee Duty of Loyalty: Conflicts of Interest �� 250 • Trustee Duty of Loyalty: Duty to Act Impartially �� 250 • Trustee Duty of Care: Failure to Test the Market�� 250 • Trustee Duty of Care: Investments & Prudent Investor Rule�� 251 • Delegation of Trustee Duties�� 251 • Trustee Acting in Accordance with the Settlor’s Wishes�� 251 • Principal and Income Allocations�� 252 • Damages for Wrongful Invasion of Trust Assets�� 252 J. Future Interests 252 • Remainder Beneficiary of a Trust�� 252 • Future Interests: Representation of Remaindermen�� 252 • Future Interests: Substituted Takers �� 253 • Vested Remainder Interest�� 253 • Vested Interests: Condition on Survivorship�� 253 • Acceleration of Future Interests�� 254 K. Powers of Appointment 254 • Powers of Appointment �� 254 • Powers of Appointment: Special Power of Appointment�� 255 • Powers of Appointment: Ineffective Appointments�� 255 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 xvi L. Rule Against Perpetuities 255 • Common Law Rule Against Perpetuities & Modern Modifications�� 255 M. Construction Problems 256 • Class Gifts�� 256 15. WILLS & ESTATES 257 A. Intestate Succession 257 • Intestate Succession�� 257 B. Will Execution Requirements 257 • Will Execution Formalities�� 257 • Will Execution Formalities: Strict Compliance & Substantial Compliance Doctrine�� 258 • Doctrine of Integration�� 258 • Interested Witnesses�� 258 • Codicils�� 259 • Holographic Wills & Codicils�� 259 C. Incorporation by Reference & Acts of Independent Significance 259 • Incorporation by Reference �� 259 • Acts of Independent Significance�� 260 D. Revocation of a Will 260 • Revocation by Physical Act�� 260 • Revocation by Subsequent Will or Codicil�� 260 • Dependent Relative Revocation Doctrine�� 260 E. Revival 261 • Revival of a Will�� 261 F. Contractual Wills 261 • Contractual Wills�� 261 G. Distribution of Property 262 • Will Takes Effect at the Time of Death�� 262 • Per Capita at Each Generation Distribution�� 262 • Modern Per Stirpes (Per Capita by Representation) Distribution�� 262 • Per Stirpes Distribution�� 262 H. Construction Problems 263 • Generically Described Property �� 263 • Advancements/Satisfaction�� 263 • Simultaneous Death�� 263 • Residue of a Residue Approach �� 263 • Conditions that Prohibit Marriage or Require Divorce�� 264 • Wills Provisions Governing when the Testator Dies With or Without Issue�� 264 • Lapsed Gifts & Anti-Lapse Statutes �� 264 • Ademption�� 264 • Stock Splits and Dividends�� 265 • Exoneration �� 265 • Abatement�� 265 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 xvii • • • • Slayer Statutes �� 266 Disclaimers�� 266 Divorce Revokes Testamentary Provisions to a Former Spouse�� 266 Prenuptial Agreement Does Not Apply to Voluntary Gifts or Bequests �� 267 I. Types of Gifts 267 • Specific, General, and Demonstrative Gifts�� 267 J. Class Gifts 267 • Class Gifts�� 267 K. Gifts to Children 268 • Inheritance Rights of Children & Disinheritance�� 268 • Legal Definition of Children�� 269 • Inheritance by Equitable Adoption�� 269 L. Family Protection 269 • Spouse’s Elective Share�� 269 • Pretermitted Children�� 270 M. Will Contests 271 • Testamentary Capacity�� 271 • Undue Influence �� 271 • Fraud�� 271 • Standing to Challenge a Will�� 272 • No-Contest Clauses�� 272 • Modification of a Will Due to Mistake�� 272 N. Non-Probate Transfers 272 • Joint Bank Accounts & Convenience Account Exception�� 272 • Totten Trusts�� 273 • Life Insurance Beneficiary�� 273 • Inter Vivos Gifts�� 273 • Invasion of Non-Probate Assets to Pay Creditors�� 274 O. Powers & Duties of Personal Representatives 274 • Powers & Duties of Personal Representatives �� 274 P. Living Wills & Durable Health Care Powers 274 • Durable Health-Care Power of Attorney & Advanced Directives�� 274 • Durable Health Care Power of Attorney & Living Wills: Insulation of Agent’s Liability�� 275 • Family Consent Laws�� 275 © 2018 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 xviii 01 AGENCY A. Agency Relationships ■■ Creation of Agency Relationship • HIGH 4 of 49 Exams An agent is a person or entity that acts on behalf of another – the principal. Agency is a fiduciary relationship, and exists if there is: (1) assent (a formal or informal agreement between the principal and the agent); (2) benefit (the agent’s conduct on behalf of the principal primarily benefits the principal); AND (3) control (the principal has the right to control the agent by being able to supervise the agent’s performance – the degree of control does not need to be significant). Whether an agency relationship exists depends upon the existence of the required elements above (the characterization of the relationship by the parties is irrelevant). ■■ Types of Agency Relationships • LOW 1 of 49 Exams There are three types of agency relationships. A universal agent has broad authority to act on behalf of the principal, and is authorized to perform ALL acts the principal is allowed to perform. A general agent normally has authority to conduct a series of transactions over a period of time for a particular purpose, business, or operation (i.e. a manager of a restaurant). A special agent has limited authority to conduct: (a) a specific act/transaction; OR (b) certain actions over a specified period of time. MEE TIP The subjects of Agency and Partnerships are normally tested together on essay questions. Feb 2009, Essay 1 Feb 2006, Essay 2 July 2004, Essay 5 Feb 1996, Essay 5 MEE TIP The rule for Creation of an Agency Relationship is normally tested along with such topics as authority, undisclosed principal, or employee vs. independent contractor. Feb 2005, Essay 7 ■■ Termination of Agency Relationship • MED 3 of 49 Exams • An agency relationship terminates and the agent no longer has authority to act if: (a) the principal or the agent manifests to the other that the relationship is terminated; (b) a specified term of the agent’s authority expired; (c) upon operation of law by the death of the principal or agent; OR (d) upon operation of law by the incapacity of the principal or agent (except where a durable power of attorney exists). o Under the common law, an agent’s authority is revoked upon death, regardless of whether the third party has notice of the death. In some states, the authority is not revoked until the third party is notified of the principal’s death. Apparent authority continues until the principal communicates the termination to third parties (even if the agency relationship was actually terminated). A principal may communicate termination by notifying third parties directly, making a public announcement, or by recovering from the agent any items indicating authority. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2002, Essay 6 July 2001, Essay 6 July 1996, Essay 2 1 01 AGENCY • Termination of an Agency Contract: When an agency relationship is governed by an agency contract (i.e. employment agreement), the principal can still terminate the agent at any time. However, the principal may be liable for damages if the agency is terminated prior to the expiration of the contract term (unless the agent materially breached the contract). B. Contractual Liability of Principal and Agent ■■ Actual Authority • HIGH 10 of 49 Exams • • A principal is bound to contracts entered into by its agent if the agent has actual or apparent authority. Actual authority may be express or implied. Express authority occurs when the principal has explicitly told the agent (either orally or in writing) that he is entitled to act. Implied authority occurs when either: (a) the agent believes he is entitled to act because the action is necessary to carry out his express authorized duties; (b) the agent has acted similarly in prior dealings between the principal and agent; OR (c) it is customary for agents in that position to act in that way. An agent has actual authority to act in accordance with his reasonable understanding of his authority, even if the principal later establishes that the agent was mistaken. Silence or prior acquiescence by the principal may give rise to the agent’s reasonable belief that he has authority to perform similar acts in the future. If an agent acts within his scope of authority, the principal will be will liable to a third-party on the contract, even if the principal is undisclosed, partially disclosed, or unidentified. MEE TIP If the essay question generally asks “Did the agent have authority?” or “Is the principal liable for the contract entered into by the agent?”, then apply the rules for both Actual Authority and Apparent Authority. Feb 2017, Essay 5 Feb 2013, Essay 6 Feb 2009, Essay 1 Feb 2005, Essay 7 July 2004, Essay 5 July 2002, Essay 6 July 2001, Essay 1 Feb 1997, Essay 4 July 1996, Essay 2 Feb 1996, Essay 5 ■■ Apparent Authority • HIGH 10 of 49 Exams A principal is bound to contracts entered into by its agent if the agent has actual or apparent authority. Apparent authority exists when: (1) a third-party reasonably believes that the person/entity has authority to act on behalf of the principal; AND (2) that belief is traceable to the principal’s manifestations (the principal holds the agent out as having authority). o A principal holds an agent out as having authority when he: (a) gives the agent a position or title indicating certain authority; (b) has previously held the agent out as having authority and has not published a revocation of said authority; OR (c) has cloaked the agent with the appearance of such authority. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 5 Feb 2013, Essay 6 Feb 2009, Essay 1 Feb 2005, Essay 7 July 2004, Essay 5 July 2002, Essay 6 July 2001, Essay 1 Feb 1997, Essay 4 July 1996, Essay 2 Feb 1996, Essay 5 2 01 AGENCY • • • A principal will be bound to a contract even if the agent acted on his own behalf or in violation of specific instructions UNLESS the third party had notice the agent was exceeding his authority. Apparent authority is NOT APPLICABLE if the third-party has actual knowledge that the agent did not have authority. Additionally, a third-party has a duty to make further inquiry when the situation suggests that it may be unreasonable to believe that the agent has authority. Unidentified/Partially Disclosed Principal: Apparent authority MAY exist when the principal is partially disclosed or unidentified (when the third-party knows the agent is acting on behalf of a principal but does not know the identity of the principal). Undisclosed Principal: Apparent authority CANNOT exist when there is an undisclosed principal (when the third-party does not know an agent is acting on behalf of a principal). ■■ Inherent Agency Power • MED 3 of 49 Exams • • Under the Restatement (Second) of Agency, the Inherent Agency Power (also known as inherent authority) protects third-parties in certain situations when dealing with agents even if there is NO actual or apparent authority. o The Inherent Agency Power is derived solely from the agency relation (it is not derived from actual authority, apparent authority, or estoppel), and exists for the protection of persons harmed by or dealing with an agent. Inherent Agency Power falls into two groups: o The first group subjects an employer to liability when: (1) the agent acts in furtherance of his employer’s business; AND (2) his conduct harms a third-party. o The second group subjects the principal to contractual liability when: (1) an agency relationship exists between the principal and agent; AND (2) the agent engages in acts that would normally be authorized, but are not because he (a) violated the principal’s instructions or (b) acted in his own interests. The concept of Inherent Agency Power was eliminated in the Restatement (Third) of Agency. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2005, Essay 7 July 2001, Essay 1 Feb 1996, Essay 5 3 01 AGENCY MEE TIP On the exam, DO NOT focus on Inherent Agency Power, unless the question specifically asks you to or it’s obvious from the fact pattern that the rule applies. Why? First, because the concept was removed from the Restatement (Third) of Agency. Secondly, the rule has been explicitly ignored on the MEE since 2005. For example, the “Note” section of Feb. 2009 MEE (Essay 1, Point Three) stated “Applicants should not receive any credit for discussing inherent authority as that doctrine is not applicable generally nor on the facts.” Further, on Feb. 2013 MEE (Essay 6, Point Three), the concept was not listed in the official part of the answer and was again mentioned in the “Note” section, which stated that the concept “may” be discussed, but that it was inapplicable and “Only minimal credit should be given for discussion of inherent agency power.” ■■ Ratification of Agent’s Contracts • MED 2 of 49 Exams • A principal’s ratification of an agent’s conduct will make the principal liable for those contracts entered into by an agent without authority. Ratification occurs when the principal: (1) has knowledge of all material facts or contract terms; AND (2) thereafter manifests assent (approves) of the same through words or conduct. o Despite ratification by the principal, an agent also remains liable for any acts or contracts entered into if the principal was not disclosed to the third party. Under the Restatement (Second) of Agency, an undisclosed principal generally CANNOT ratify an agent’s unauthorized act because ratification requires that the agent purported to act on the principal’s behalf. However, under the Restatement (Third) of Agency, an undisclosed principal MAY ratify an agent’s unauthorized act. Feb 2017, Essay 5 Feb 2013, Essay 6 ■■ Agent’s Contractual Liability • HIGH 5 of 49 Exams Generally, an agent has NO contractual liability to a thirdparty for a contracts entered into with that party if he: (1) fully discloses the principal he is acting on behalf of (he provides the name of the principal to the third-party); AND (2) acts within the scope of his authority. Conversely, an agent will be liable on the contract if his conduct was unauthorized. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 5 Feb 2013, Essay 6 July 2006, Essay 2 Feb 1997, Essay 4 Feb 1996, Essay 5 4 01 AGENCY • • • An authorized agent will be liable to the third-party on a contract when the principal is undisclosed (when the third-party does not know the agent is acting on behalf of a principal). Moreover, an undisclosed principal’s ratification DOES NOT eliminate the agent’s liability to the third-party on the contract. Unless otherwise agreed, an authorized agent will be liable to the third-party on a contract when the principal is partially disclosed or unidentified (when the third-party knows the agent is acting on behalf of a principal but does not know the identity of the principal). Where an agent is liable on a contract AND his conduct was authorized, he may seek indemnification from the principal on any payments he made to the third-party. C. Vicarious Liability of Principal for an Agent’s Torts MEE TIP On the exam, use this checklist for solving a question concerning an employer’s vicarious liability: • Step 1: Is the person who committed the tort an employee? o If the question states that the person is an employee, you can skip this step. o If it’s unclear if the person is an employee or independent contractor, apply the “Employee vs. Independent Contractor” rule. • Step 2: If the person is an employee, determine if the tortious act was committed within the scope of employment. o See “Vicarious Liability of Employer: Doctrine of Respondeat Superior” rule.  If the act was within scope of employment, then employer is liable.  If the act was not within scope of employment, then the employer is generally not liable (but see exceptions in Step 3 below). • Step 3: Do any exceptions apply to hold an employer liable when the tort was not committed with the scope of employment? o See the “Vicarious Liability of Employer: Liability Where Respondeat Superior Doctrine Inapplicable” rule. • Step 4: Is the principal liable for acts of the Independent Contractor? © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 5 01 AGENCY o ■■ Employee vs. • HIGH 5 of 49 Exams • • See “Vicarious Liability for Acts of Independent Contractors” rule.  Generally, a principal is not liable.  But, check if any exceptions apply. Independent Contractor An employer is vicariously liable for an employee’s negligent acts if the employee was acting within the scope of employment. However, a principal/employer is generally NOT vicariously liable for the torts of an independent contractor. o An employee is an agent whom the employer controls (or has the right to control) the manner and means of the agent’s performance of work. o An independent contractor is a person who contracts with another to do something for him, but who is not controlled nor subject to the other’s right to control with respect to his performance. The contractor may or may not be an agent. The determination of whether a person is an employee or an independent contractor centers on whether the principal had the right to control the manner and method in which the job is performed. o Generally, if the principal has substantial control in dictating the manner and method in which the job is performed, then the person is deemed to be an employee of the principal. In contrast, a person subject to less extensive control is considered an independent contractor. o Whether an employer-employee relationship exists is a factual determination (the characterization of the relationship by the parties is not determinative). The factors used to determine whether an agent is an employee are: (1) the extent of control the principal may exercise over the details of the work; (2) if the agent is engaged in a distinct occupation or business; (3) the type of work; (4) how the agent is paid (hourly or per project); (5) who supplied the equipment or tools; (6) the degree of supervision; (7) the degree of skill required; (8) whether the job was part of the principal’s regular business; (9) the length of time the agent is engaged by the principal; (10) whether the principal and the agent believe that they are creating an employment relationship; and (11) whether the person was hired for a business purpose. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 1 Feb 2015, Essay 1 Feb 2006, Essay 2 July 2004, Essay 5 Feb 2003, Essay 4 6 01 AGENCY ■■ Vicarious Liability of Employer: Superior • HIGH • 5 of 49 Exams • • Under the doctrine of respondeat superior, an employer is vicariously liable for an employee’s negligent acts if the employee was acting within the scope of employment. An employee acts within the 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. Factors to determine if conduct is within the scope of employment include whether: (i) it’s the kind the employee is employed to perform; (ii) it occurs substantially within the authorized time and space limits; and (iii) it is motivated (in whole or part) by a purpose to serve the employer. Additionally, conduct is within the scope of employment if it’s of the same general nature (or incidental) as the conduct authorized. Conduct is NOT outside the scope of employment merely because an employee disregards the employer’s instructions. An employee’s act is NOT within the scope of employment when: (1) it occurs within an independent course of conduct; AND (2) it is not intended by the employee to serve any purpose of the employer. An employee’s intentional torts are generally NOT within the scope of employment UNLESS the act: (a) was specifically authorized by the employer; (b) was driven by a desire to serve the employer; OR (c) was the result of naturally occurring friction from the type of employment. ■■ Vicarious Liability of Employer: Superior Doctrine Inapplicable • MED 2 of 49 Exams Doctrine of Respondeat Feb 2015, Essay 1 July 2013, Essay 2 Feb 2010, Essay 4 Feb 2006, Essay 2 Feb 2003, Essay 4 This is a cross-over rule with Torts, and has been listed in both the Torts and Agency subjects because it has appeared on both Agency and Torts essays. In recent years when the rule was tested, the essay was designated as an “Agency & Torts” cross-over question. Liability Where Respondeat In certain situations, an employer may still be liable even if the doctrine of respondeat superior (an employer/employee relationship and conduct within the scope of employment) is inapplicable. Such situations include when: (a) the employer intended the conduct or consequences; (b) the employer was negligent or reckless in selecting, training, retaining, supervising, or controlling the employee; (c) the conduct involved an employer’s non-delegable duty to an injured person that it had a special relationship with; OR (d) when (i) the employee had apparent authority, (ii) the agent’s appearance of authority enables the agent to commit the tort, and (iii) the third-party relied on that authority. Apparent authority is created when the employer holds the employee out as having authority and the third-party reasonably believes the employee has authority to act. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2013, Essay 2 Feb 2003, Essay 4 7 01 AGENCY ■■ Vicarious Liability for Acts of Independent Contractors • MED • 2 of 49 Exams Generally, a principal is NOT vicariously liable for the torts of an independent contractor. However, several exceptions exist, and a principal will be liable for torts committed by an independent contractor if: (a) the independent contractor is engaged in an inherently hazardous activity; (b) the duty owed by the principal is nondelegable (i.e. the duty of care owed to an invitee); OR (c) through the doctrine of estoppel when (i) the principal holds the independent contractor out as his agent to a third-party, (ii) the third-party reasonably relied on the care and skill of the agent, and (iii) the third-party suffered harm as a result of the agent’s lack of care or skill. July 2017, Essay 1 July 2004, Essay 5 D. Fiduciary Duties Between Principal and Agent ■■ Fiduciary Duties Owed by the Agent to the Principal • HIGH 4 of 49 Exams • • An agent owes the principal the following fiduciary duties concerning matters within the scope of agency: (1) Duty of Care – to use reasonable care when performing the agent’s duties; (2) Duty of Loyalty – to act solely and loyally for the principal’s benefit; AND (3) Duty of Obedience – to obey all reasonable directions given by the principal and to act in accordance with the express or implied terms of the relationship. The principal has a claim against the agent when an agent breaches any fiduciary duty owed. For example, an agent will be liable to the principal for any payments the principal made to a third-party when the agent breached his duty to follow directions or acted outside the scope of his authority. Additionally, the agent will be liable and must account for any profit made in violation of the duty of loyalty. Conversely, an agent has NO liability to the principal when the agent fulfills his fiduciary obligations and he acts within the scope of his authority. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2006, Essay 2 July 2002, Essay 6 July 2001, Essay 1 Feb 1997, Essay 4 8 02 PARTNERSHIPS UPA = Uniform Partnership Act RUPA = Revised Uniform Partnership Act RULPA = Revised Uniform Limited Partnership Act A. Creation of Partnerships MEE TIP The subjects of Partnerships and Agency are normally tested together on Essay questions. ■■ Creation of a General Partnership • HIGH 7 of 49 Exams • • • A General Partnership is created when (1) two or more persons, (2) as co-owners, (3) carry on a business for profit. No written agreement or formalities are required. A person’s intent to form a partnership or be partners is NOT required. Part ownership or common ownership of property alone is NOT enough to create a partnership. Likewise, a joint venture DOES NOT automatically create a partnership. A person who receives a share of the profits of the partnership business is presumed to be a partner of the business UNLESS the profits were received in payment: (a) of a debt; (b) for wages as an employee or independent contractor; (c) of rent; (d) of an annuity or other retirement benefit; (e) of interest/loan charges; OR (f) for the sale of the goodwill of a business. Individuals may inadvertently create a general partnership despite their expressed subjective intent not to do so (i.e. when the required formalities to form a Limited Partnership or Limited Liability Partnership are not followed). Feb 2019, Essay 3 July 2010, Essay 1 July 2009, Essay 8 July 2007, Essay 4 July 2006, Essay 2 July 1999, Essay 2 July 1997, Essay 1 ■■ Formation of a Limited Partnership (LP) • MED 2 of 49 Exams • A Limited Partnership is a partnership composed of general and limited partners, and MUST have at least one general partner. It is formed upon the filing of a Certificate of Limited Partnership with the Secretary of State that includes: (1) the name of the partnership; (2) the address of the partnership; (3) name and address of each partner; (4) whether the partnership is a Limited Liability Partnership; AND (5) it must be signed by a general partner. If the Certificate of Limited Partnership fails to meet the above requirements, then a General Partnership is created. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2009, Essay 8 July 1999, Essay 2 9 02 PARTNERSHIPS ■■ Formation of a Limited Liability Partnership (LLP) • MED 2 of 49 Exams • A Limited Liability Partnership (LLP) is one in which all partners have limited personal liability. Any partnership may become an LLP upon: (1) approval by the same vote that is necessary to amend the partnership agreement; AND (2) by filing a Statement of Qualification with the Secretary of State. Unless otherwise agreed, a unanimous vote is required to amend a partnership agreement. o A Statement of Qualification must include: (i) the name and address of the partnership; (ii) a statement that the partnership elects to become an LLP; AND (iii) a deferred effective date, if any. The name of a LLP must end with “Registered Limited Liability Partnership”, “Limited Liability Partnership”, “R.L.L.P.”, “L.L.P.”, “RLLP,” or “LLP”. The filing of a Statement of Qualification DOES NOT create a new partnership. Instead, the LLP continues to be the same partnership entity that existed prior to the filing. Thus, the LLP remains liable for any unfulfilled obligations of the partnership entity before it became an LLP. MEE TIP Formation of an LP or LLP is usually tested in conjunction with a partner’s personal liability, especially when the LP or LLP formation requirements are not followed. Feb 2014, Essay 6 Feb 2012, Essay 6 B. Power and Liability of Partners ■■ Authority to Bind the Partnership • HIGH 8 of 49 Exams • • Each partner is an agent of the partnership, and generally has authority to bind the partnership for the purpose of its business (including entering into contracts). A partner has express actual authority to bind the partnership upon receiving said authority from the partners. Acts within the ordinary course of the partnership business need only be approved by a majority of the partners. Acts outside the ordinary course of business must be approved unanimously. If the partnership agreement is silent on the scope of the partner’s authority, a partner has authority to bind the partnership to usual and customary matters, UNLESS the partner knows that: (a) other partners might disagree; OR (b) for some other reason consultation with fellow partners is appropriate. Hiring an employee is normally within the ordinary course of partnership business, unless the partnership agreement states otherwise. A partner has implied actual authority (also known as incidental authority) to take actions that are reasonably incidental or necessary to achieve the partner’s authorized duties. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 3 Feb 2016, Essay 3 Feb 2014, Essay 6 July 2007, Essay 4 July 2006, Essay 2 July 2003 Essay 5 Feb 2001, Essay 2 July 1997, Essay 1 10 02 PARTNERSHIPS • • A partner has apparent authority to bind the partnership for all acts apparently conducted within the ordinary course of the partnership business OR the kind carried on by the partnership. However, a partner’s act will NOT bind the partnership if: (1) the partner lacked authority; AND (2) the third-party knew (actual knowledge) or had notice that the partner lacked authority. An act or transaction is within the ordinary course of business if it is normal and necessary for managing the business – a person would reasonably conclude the act is directly and necessarily embraced within the partnership business. ■■ Authority to Bind a Partnership After Dissolution • MED 3 of 49 Exams • • After dissolution, a partner’s actual authority to bind the partnership is limited only to those acts appropriate for winding up the partnership business. However, a partner has apparent authority to bind the partnership even after dissolution if: (1) the partner’s acts would have normally bound the partnership; AND (2) the third-party did not have notice of the dissolution. If the partnership is bound, then ALL partners will be jointly and severally liable for the partnership’s obligation. Any partner that pays more than their proportionate share of their obligation to a third-party may seek contribution from the other partners. Under the Revised Uniform Partnership Act (RUPA), a person winding up a partnership’s business may: (1) preserve the partnership business or property as a going concern for a reasonable time; (2) prosecute and defend actions and proceedings; (3) settle and close the partnership’s business; (4) dispose of and transfer the partnership’s property; (5) discharge the partnership’s liabilities; (6) distribute the assets of the partnership; (7) settle disputes by mediation or arbitration; and (8) perform other necessary acts. July 2011, Essay 9 Feb 2004, Essay 6 July 1997, Essay 1 ■■ Personal Liability of General Partners & Judgment Enforcement • HIGH 8 of 49 Exams Personal Liability: General Partners are personally liable for ALL obligations of the partnership UNLESS otherwise agreed by the claimant or provided by law. o Under the Uniform Partnership Act (1997), general partners are jointly and severally liable for partnership obligations, which means that a claimant can collect the full amount of the debt from any one of the partners. However, a partner may seek contribution © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2014, Essay 6 Feb 2012, Essay 6 July 2011, Essay 9 July 2009, Essay 8 July 2007, Essay 4 July 2006, Essay 2 Feb 2001, Essay 2 July 1997, Essay 1 11 02 PARTNERSHIPS • • from the other partners if he pays more than his proportionate share of the partnership obligation. o Under the Uniform Partnership Act (1914), general partners are only jointly liable (not jointly and severally liable), which means that a plaintiff must join all partners in an action. Incoming Partners: Incoming partners admitted into an existing partnership are NOT liable for obligations incurred prior to their admission, even if the incoming partner has notice of a claim. Even though that partner is not personally liable for the debts of the partnership, he is still at risk of losing any capital contributions he made to the partnership that are used to satisfy partnership obligations. Judgment Enforcement Against a Partner’s Personal Assets: Generally, a judgment creditor CANNOT levy execution of the judgment against a partner’s personal assets for a partnership debt UNLESS: (1) a judgment has been rendered against the partner; AND (2) the partnership assets have been exhausted or are insufficient. o Under the Uniform Partnership Act, a judgment against the partnership is NOT by itself a judgment against the individual partners. However, a judgment may be sought against the partnership and the individual partners in the same action. MEE TIP Apply the rule for Incoming Partners if the fact pattern touches upon the personal liability of an incoming partner. Apply the rule for Judgment Enforcement when a creditor is attempting to enforce a judgment against a partner’s personal assets. ■■ Personal Liability of Limited Partners • MED 3 of 49 Exams • • • Generally, limited partners are NOT personally liable for obligations of the Limited Partnership (LP). However, certain exceptions to this rule exist. First, limited partners are ALWAYS liable for their own misconduct or when they sign a personal guarantee for an obligation. Second, even if a partner is not personally liable for the debts of the partnership, he is at risk of losing any capital contributions he made to the partnership. Third, a limited partner MAY become personally liable if that partner participates in the management or control of the business. If a limited partner’s control and management activities are so extensive as to be substantially the same as those of a general partner, then some jurisdictions have held the partner to be liable in the same manner as a general partner. Whether the limited partner is liable (and the extent of the liability) depends on the applicable Act enacted in the jurisdiction. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2007, Essay 6 Feb 2000, Essay 2 Feb 1999, Essay 2 12 02 PARTNERSHIPS o o o o Under the latest Uniform Limited Partnership Act (2001), limited partners are NOT personally liable for an obligation of the LP, and liability is NOT created when the limited partner participates in the management or control of the business. Under earlier versions of the Uniform Limited Partnership Act, participation in the management or control of the business subjected the limited partner to personal liability for the LP’s obligations. In jurisdictions that follow the earlier versions, participating in the removal of a director is NOT considered to be participating in management and control. Under RULPA, a limited partner will become liable for the obligations of the LP if he participates in the control of the business. However, that limited partner is liable only to persons who transact business with the LP reasonably believing that the limited partner is a general partner (based upon the limited partner’s conduct). The RULPA Safe Harbor Provision sets forth certain activities that DO NOT constitute the exercise of control and management, which include: (1) being a contractor for, or an agent, employee, general partner of the LP; (2) being an officer, director, or shareholder of a corporation that is a general partner of the LP; (3) advising or consulting with a general partner concerning the business of the LP; (4) acting as surety or guaranteeing an obligation of the limited partnership; (5) bringing a derivative action in the right of the LP; (6) requesting or attending a meeting of partners; (7) proposing, approving, or disapproving the following matters: (i) the dissolution and winding up of the LP; (ii) the sale, exchange, lease, mortgage, pledge, or other transfer of all (or substantially all) of the assets of the LP; (iii) the incurrence of indebtedness by the LP other than in the ordinary course of its business; (iv) a change in the nature of the business; (v) the admission or removal of a general partner; (vi) the admission or removal of a limited partner; (vii) a transaction involving an actual or potential conflict of interest between a general partner and the LP or the limited partners; and (viii) an amendment to the partnership agreement or certificate of limited partnership. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 13 02 PARTNERSHIPS ■■ Personal Liability of Limited Liability Partners • MED 3 of 49 Exams • An obligation incurred by a Limited Liability Partnership (LLP) is solely the obligation of the LLP. Under RUPA, a partner in an LLP is NOT liable for partnership obligations. However, certain exceptions to this rule exist. First, partners are ALWAYS liable for their own misconduct or when they sign a personal guarantee for the obligation. Second, even if a partner is not personally liable for the debts of the partnership, he is at risk of losing any capital contributions he made to it. Third, obligations incurred before a partnership becomes an LLP are treated as obligations of the prior partnership entity (i.e. general partnership or limited partnership). Feb 2016, Essay 3 Feb 2014, Essay 6 Feb 2012, Essay 6 C. Rights of Partners Among Themselves ■■ Sharing of Profits and Losses • LOW 1 of 49 Exams Unless otherwise agreed, profits are shared equally between partners, and losses will be shared in the same ratio as profits. If an agreement is only made to how losses are shared (no matter the ratio), then profits will be shared equally. Any partner who pays more than his fair share in partnership losses is entitled to receive a contribution from the other partner(s) for their proportional share of the losses. Feb 2004, Essay 6 ■■ Right to Management & Control • MED • 2 of 49 Exams Unless otherwise agreed, each partner has equal rights in the management and control of the partnership business. Disagreements as to ordinary partnership business need only be approved by a majority of the partners, but acts outside the ordinary course of business must be approved unanimously by the partners. Hiring an employee is normally within the ordinary course of partnership business (unless the partnership agreement states otherwise). Feb 2019, Essay 3 Feb 1995, Essay 4 ■■ Transfer of Ownership Interest in a Partnership • MED 3 of 49 Exams A partner can only transfer: (1) his interest in the share of the profits and losses; AND (2) his right to receive distributions. All other incidents of partnership ownership (such as the right to access partnership property, the right to inspect books and records, and the right to participate in © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2010, Essay 1 July 2008, Essay 3 Feb 2002, Essay 3 14 02 PARTNERSHIPS • management of the partnership) belong to the partnership and CANNOT be transferred. The partnership does not need to give effect to a transferee’s rights until the partnership has proper notice of the transfer of ownership. Unless a written partnership agreement states otherwise, ALL partners must consent for a transferee of a partnership interest to become a partner in the business. If the transferee becomes a partner, he may be liable for partnership obligations arising after their admittance, depending on the type of partnership entity (i.e. general partnership, limited partnership, limited liability partnership). ■■ Right to Partnership Property • MED 3 of 49 Exams • • A partnership is a distinct legal entity from its partners. All property acquired by a partnership OR with partnership assets is owned by the partnership (not the partners individually). Instead, partners only have an equal right to use partnership property for partnership purposes. Any personal use of the property requires the consent of the other partners. Property acquired in the name of a partner is presumed to be separate property (even if used for partnership purposes) as long as: (1) no partnership assets are used to acquire the property; AND (2) no written title instrument for the property references the partnership or that the person is partner. Under the Uniform Partnership Act, a judgment solely against an individual partner (and not the partnership) CANNOT be satisfied with partnership property because an individual partner has no ownership interest in the partnership’s property. However, judgment creditors MAY seize the partner’s financial interest in the partnership. July 2010, Essay 1 July 2008, Essay 3 July 1999, Essay 2 ■■ Remuneration (Payment for Partner’s Services) • LOW 1 of 49 Exams A partner is NOT entitled to remuneration (payment) for services performed for the partnership UNLESS: (a) there is an agreement to the contrary; OR (b) it is for the reasonable compensation of services rendered in winding up the business of the partnership. Some courts have permitted remuneration based on an implied agreement to compensate a partner. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2001, Essay 2 15 02 PARTNERSHIPS ■■ Partnership Ownership of Inventions • LOW 1 of 49 Exams Unless otherwise agreed, a partner or agent employed to do non-inventive work is personally entitled to patents which are the result of his invention (even if the invention concerns the work in which he is employed). However, the partnership is entitled to the patent when: (a) partnership facilities or business time is used to create the invention; OR (b) the partner is employed to do inventive work. Feb 1998, Essay 1 ■■ Advance of Funds to the Partnership & Reimbursement • LOW 1 of 49 Exams A partnership shall reimburse a partner for an advance to the partnership beyond the amount of capital the partner agreed to contribute. If the partnership has insufficient funds to reimburse the partner, the partner has the right to be reimbursed for a portion of the contribution from the other general partners based on each’s percentage of ownership. Feb 2001, Essay 2 D. Special Rules Concerning Limited Partnerships ■■ Management & Control in a Limited Partnership • MED 2 of 49 Exams A Limited Partnership (LP) is composed of general and limited partners. General partners of a LP have full management rights and control the partnership business to the exclusion of the limited partners. Limited partners have NO say or control as to how the partnership is run, and they DO NOT have the right to manage or control the day-to-day business of the partnership. Limited partners are generally passive, and have voting rights only in extraordinary situations, such as the sale of the partnership (or all of its assets), amending the partnership agreement, or admitting a new partner. Feb 2002, Essay 3 Feb 2000, Essay 2 ■■ Limited Partner’s Right to Inspect Records • MED 2 of 49 Exams • Under RULPA, a limited partner has the right during normal business hours to inspect and copy any information that the Limited Partnership (LP) is legally required to keep. In addition, a limited partner may obtain upon a reasonable demand: (1) true and full information regarding the state of the business and financial condition; (2) copies of the LP’s tax returns; and (3) any other information regarding the affairs of the LP that is just and reasonable. These rights may be exercised for any purpose. Seeking to obtain documents because of suspicion of mismanagement or self-dealing is considered a just and reasonable demand. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2007, Essay 6 Feb 2002, Essay 3 16 02 PARTNERSHIPS E. Duties Owed by Partners ■■ Duty of Care • HIGH 4 of 49 Exams • • A partner owes the fiduciary duty of care to the partnership and the other partners, but this duty is limited. Under the RUPA, a partner is only in breach of the duty of care when he engages in: (a) grossly negligent or reckless conduct; (b) intentional misconduct; OR (c) a knowing violation of law. If a partner breaches this duty, he may be held personally liable to the partnership for any losses suffered as a result. Partners in a Limited Partnership have similar duties as partners in a General Partnership. A partner has been found to breach the duty of care in the following situations: (i) violating an agreement or policy of the partnership; (ii) failing to thoroughly investigate facts before entering into a contract, if it rises to the level of gross negligence; and (iii) acting outside the scope of the partnership business without the consent of the other partners. Limited liability rules for Limited Liability Partnerships and Limited Partners are NOT applicable to claims against partners for breach of their duties owed to the partnership. Feb 2016, Essay 3 July 2003, Essay 5 Feb 2000, Essay 2 Feb 1998, Essay 1 ■■ Duty of Loyalty • HIGH 6 of 49 Exams • Partners owe the fiduciary duty of loyalty to the partnership and the other partners, which requires partners to act in the best interests of the partnership. Under RUPA, a partner must: (1) account for any property, profit, or benefit derived by the partner from the partnership property or business (this includes the obligation to refrain from appropriating partnership opportunities or assets for personal use); (2) not have an interest adverse (conflict of interest) to the partnership (i.e. partners cannot engage in unfair transactions with the partnership); AND (3) not compete with the partnership (unless the partnership agreement allows the partner to do so). The above duties still apply after dissolution during the winding up process (except for the duty not to compete). Partners in a Limited Partnership have similar duties as partners in a General Partnership. oo A partnership opportunity is one that is (1) closely related to the entity’s existing or prospective line of business, (2) that would competitively advantage the partnership, AND (3) that the partnership has the financial ability, knowledge, and experience to pursue. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 6 Feb 2016, Essay 3 Feb 2000, Essay 2 Feb 1999, Essay 2 Feb 1998, Essay 1 Feb 1995, Essay 4 17 02 PARTNERSHIPS • • HOWEVER, a partner is NOT liable for conduct that would otherwise violate the duty of loyalty if: (1) the partner fully discloses the information; AND (2) either (a) the Partnership Agreement is amended or (b) all partners consent to the transaction. Unless agreed otherwise, the Partnership Agreement may be amended at any time with a unanimous vote of the partners. An interested partner should abstain from voting to amend the Partnership Agreement to allow for conduct that would otherwise violate the duty of loyalty. If a partner breaches his duty of loyalty, he may be held personally liable to the partnership for any losses suffered as a result. If reasonable, a partnership agreement may eliminate or alter a partner’s duty of loyalty. ■■ Duty to Provide Full Information • MED 3 of 49 Exams • • Under the Uniform Partnership Act (UPA), partners shall render, on demand by any partner, the true and full information of all things affecting the partnership. Under the Revised Uniform Partnership Act (RUPA), a partner shall disclose without demand full information concerning the partnership’s business and affairs (if access to such information would be reasonably required for other partners to properly exercise their rights and duties). This duty is encompassed within a partner’s obligation of good faith and fair dealing. If a partner breaches this duty, he may be held personally liable to the partnership for any losses suffered as a result. Partners in a Limited Partnership have similar duties as partners in a general partnership. Feb 2018, Essay 6 July 2003, Essay 5 Feb 2000, Essay 2 ■■ Action Against a Partner for Misconduct • LOW 1 of 49 Exams The duty of loyalty and care are owed to both the partnership and the other partners. Thus, the partnership can maintain an action against a partner for violating his fiduciary duties to the partnership. Additionally, a partner can maintain a direct action against another partner (with or without an accounting) to enforce the partner’s rights, including an action for violation of a fiduciary duty. A partner CANNOT maintain a derivative action on behalf of the partnership because they are not permitted under RUPA. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2016, Essay 3 18 02 PARTNERSHIPS F. Dissociation and Dissolution ■■ Dissociation (Withdrawal of a Partner) • HIGH 4 of 49 Exams • • A partner becomes dissociated from the partnership upon: (1) notice of the partner’s express will to withdraw; (2) occurrence of an agreed upon event in the partnership agreement; (3) expulsion pursuant to the partnership agreement; (4) expulsion by the unanimous vote of the other partners if it’s (a) unlawful to carry on the partnership business with that partner, or (b) there has been a transfer of all or substantially all of that partner’s transferable interest in the partnership (other than a transfer for security purposes); (5) judicial expulsion; (6) bankruptcy; (7) incapacity or death; (8) appointment of a personal representative or receiver; OR (9) termination of an entity partner (who is not an individual, partnership, corporation, trust, or estate). A partner may dissociate (withdraw) from the partnership at any time by providing notice to the other partners. However, a dissociation will be deemed wrongful if: (a) it is in breach of an express provision of the partnership agreement; OR (b) if the partnership is for a definite term or particular undertaking, AND the partner (i) withdraws, (ii) is expelled by judicial determination, or (iii) is dissociated by becoming a debtor in bankruptcy. A partner who wrongfully dissociates CANNOT participate in management or the winding up process. Additionally, that partner is liable to the other partners and the partnership for any damages caused by his dissociation. Feb 2019, Essay 3 Feb 2018, Essay 6 July 2011, Essay 9 July 1998, Essay 2 The July 1998 MEE (Essay 2, Point Two) discusses dissolution, but RUPA changed the terminology to “dissociation” in this context. ■■ Dissolution of a General Partnership • HIGH 8 of 49 Exams Unless there is an agreement to the contrary, dissolution occurs upon: (a) notice of the partner’s express will to withdraw; (b) an event agreed to in the partnership agreement; (c) an event that makes it unlawful for all or substantially all of the business to continue; (d) judicial dissolution on application of a partner that (i) the economic purpose of the partnership is likely to be unreasonably frustrated, (ii) another partner has engaged in conduct making it not reasonably practicable to carry on the business with that partner, or (iii) it is not reasonably practicable to carry on the business in conformity with the partnership agreement; OR (e) judicial dissolution on application of a transferee (of a partner’s transferable interest) that it is equitable to wind up © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 3 Feb 2018, Essay 6 July 2011, Essay 9 July 2008, Essay 3 Feb 2004, Essay 6 Feb 2000, Essay 2 July 1999, Essay 2 July 1998, Essay 2 19 02 PARTNERSHIPS • • the business and either (i) it is a partnership at will, or (ii) at the expiration of the term or completion of the undertaking (if the partnership was for a definite term or particular undertaking). In addition to the above, dissolution of a Partnership for a Definite Term also occurs: (a) within 90 days after a partner’s dissociation by death or wrongful dissociation, if it is the express will of at least half of the remaining partners to wind up the business (a partner’s rightful dissociation constitutes the expression of that partner’s will to wind up the partnership business); (b) upon the express will of all partners to wind up the business; OR (c) upon the expiration of the term or the completion of the purpose of the partnership. A partner may dissociate (withdraw) from the partnership at any time by providing notice to the other partners. o Under the Revised Uniform Partnership Act (as amended in 2013), dissolution may be rescinded by the affirmative vote or consent of the remaining partners. In such instance, the business would be continued, and the dissociating partner is entitled to a buyout of their interest. The buyout price is the value of the partnership interest based on the greater of the liquidation or going concern value (plus interest). If the dissociating partner makes a written demand and no agreement for the purchase of the interest is made within 120 days, the partnership shall pay in money the amount it estimates to be the buyout price plus accrued interest. o Under the Revised Uniform Partnership Act (1997), the dissociation (withdrawal) of a partner does not necessarily cause a dissolution and winding up of the business of the partnership. A wrongful dissociation allows ALL of the remaining partners (including those who are rightfully dissociated) to waive windingup and termination of the partnership, and instead choose to continue the partnership by buying out the dissociated partner’s interest in the partnership. If a partner’s dissociation is NOT wrongful, then he will be allowed to vote on whether to waive winding-up and termination of the partnership. In either case, the partners MAY choose to continue the business for a reasonable amount of time. o Under the Uniform Partnership Act (1914), a partner’s withdrawal results in dissolution of the partnership, regardless of whether it was rightful © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP On an essay question concerning Dissolution caused by the Withdrawal of a Partner, apply the RUPA (as amended in 2013) rule, unless the essay question states that the jurisdiction follows RUPA (1997) or UPA (1914). In such instance, apply the appropriate rule for that jurisdiction. 20 02 PARTNERSHIPS • or wrongful. However, ALL partners who have not wrongfully caused the dissolution may choose to continue the business in the same name. Upon dissolution, the partnership is NOT terminated, but continues until the winding up of partnership affairs is completed. Winding up is the process of settling partnership affairs after dissolution. The partners’ rights, duties, and powers continue during the winding up process. The partnership is terminated when the winding up of its business is completed. ■■ Dissolution of a Limited Partnership • LOW 1 of 49 Exams A non-judicial dissolution of a Limited Partnership (LP) occurs upon: (a) the happening of an event specified in the partnership agreement; (b) the consent of all general partners and of limited partners owning a majority of the rights to receive distributions; (c) after the dissociation of a general partner either (i) upon consent of partners owning a majority of the rights to receive distributions as partners (if the LP has at least one remaining general partner), or (ii) the passage of 90 days after the dissociation if the LP does not have a remaining general partner (unless the LP admits at least one general partner); (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 for the partnership’s failure to pay fees or abide by filing requirements. Feb 2000, Essay 2 ■■ Winding Up & Termination of the Partnership • MED 2 of 49 Exams • Upon dissolution, the partnership is NOT terminated, but continues until the winding up of partnership affairs is completed. Winding up is the process of settling partnership affairs after dissolution. The partnership is terminated when the winding up of its business is completed. During the winding up process, partnership assets are converted to cash and then distributed in the following order: (1) creditors; (2) partners’ capital contributions; and (3) profits to be distributed among the partners. Some jurisdictions require that the debts owed to non-partner creditors (outside creditors) be paid before the debts owed to partner creditors (inside creditors). If partnership assets are insufficient to pay the liabilities of the partnership, the loss will be divided among the partners. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2000, Essay 2 July 1999, Essay 2 21 03 CORPORATIONS & LLC’S RMBCA = Revised Model Business Corporation Act RULLCA = Revised Uniform Limited Liability Company Act A. Formation of a Corporation ■■ Formation of a Corporation (Articles of Incorporation) • MED 2 of 49 Exams • • Under the RMBCA, a corporation’s existence begins on the date the Articles of Incorporation are filed with the Secretary of State, UNLESS a delayed effective date is specified. The RMBCA DOES NOT allow for an earlier effective date to be specified because a corporation CANNOT exist until the Articles of Incorporation are properly filed. The Articles of Incorporation MUST contain: (1) the corporate name; (2) the number of shares the corporation is authorized to issue; (3) the address of the corporation’s initial registered office and the name of its initial registered agent at that office; AND (4) the name and address of each incorporator. A legally formed corporation is called a de jure corporation. MEE TIP If an essay question says to apply the Model Business Corporation Act (MBCA), then apply the RMBCA as it’s the most recent version of the MBCA. On the exam, MBCA and RMBCA have been used interchangeably. July 2018, Essay 6 Feb 2011, Essay 7 ■■ Bylaws • MED 2 of 49 Exams • The Bylaws are the rules and regulations adopted by the Board of Directors that govern the internal operations and management of a corporation, including the roles and duties of directors and officers. Under the RMBCA, the Bylaws may contain any provision that is NOT inconsistent with: (a) the Articles of Incorporation; OR (b) the law of the jurisdiction. When there is a conflict between the Articles of Incorporation and the Bylaws, the Articles of Incorporation control. In addition, the Articles of Incorporation may give certain powers only to the shareholders (and limit certain powers of the directors). The inclusion of director-nomination procedures in the Bylaws is allowed under the RMBCA and Delaware law. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2014, Essay 6 July 2010, Essay 9 22 03 CORPORATIONS & LLC’S ■■ Amending the Bylaws • LOW 1 of 49 Exams The Bylaws may be amended or repealed by shareholders. In addition, the Board of Directors may also amend or repeal the bylaws UNLESS: (a) the Articles of Incorporation exclusively reserves the power to the shareholders; OR (b) the shareholders, in amending/ adopting/repealing a bylaw, expressly provide that the Board of Directors cannot amend/repeal/reinstate that bylaw. If the bylaw deals with director-nomination procedures, the Board of Directors retain power to safeguard the voting process, but it CANNOT repeal a shareholder approved bylaw. July 2014, Essay 6 ■■ Powers of a Corporation • LOW 1 of 49 Exams Under the RMBCA (and most states), a corporation has the power to do all things necessary or convenient to carry out its business and affairs, including: (1) to sue and be sued; (2) to own, lease, or convey real or personal property; (3) to make contracts, borrow money, issue notes or bonds; (4) to lend money and make investments; (5) to own or be involved with another business entity; (6) to fix the compensation of directors, officers, and employees; (7) to lend directors, officers, employees money; (8) to make charitable donations; (9) to make payments or donations that furthers the business and affairs of the corporation; and (10) to pay or engage in lobbying to aid governmental policy. July 1999, Essay 7 B. Formation of a Limited Liability Company (LLC) ■■ Formation of an LLC • LOW 1 of 49 Exams • Generally, a Limited Liability Company (LLC) is formed when: (1) the Articles of Organization (a.k.a. Certificate of Formation) is properly filed with the Secretary of State; AND (2) the company has at least one member. Unless stated otherwise, the Operating Agreement governs: (1) the relations between the members and the LLC; (2) the rights and duties of managers; (3) the activities and affairs of the company; AND (4) any means and conditions for amending the Operating Agreement. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 3 23 03 CORPORATIONS & LLC’S C. Pre-Formation Contract Liability ■■ Liability of Promoter for Pre-Incorporation Contracts • MED 3 of 49 Exams • • A promoter is a person who acts on behalf of a corporation that has not yet been formed. Under the RMBCA, a person is personally liable for any liabilities arising from their conduct when (1) he purports to act as or on behalf of a corporation, (2) knowing that no corporation was formed (actual knowledge is required). If multiple promoters are liable, then each will be jointly and severally liable. A promoter remains personally liable for pre-incorporation contracts even if the corporation subsequently adopts the contract. In such a situation, both the corporation and the promoter are liable. However, a promoter will NOT be liable if: (a) there is a subsequent novation (an agreement by all parties to substitute the corporation for the promoter and to relieve the promoter of the contractual obligation); OR (b) the contract explicitly provides that the promoter has no personal liability on the contract. If the promoter is liable to a third-party, he will normally be entitled to indemnification from the corporation (unless he violated a fiduciary duty in entering the contract). MEE TIP Although the area of preformation contracts for LLC’s is unresolved, generally the same principles apply whether the entity to be formed is a corporation or an LLC. Feb 2011, Essay 7 July 2005, Essay 2 July 1999, Essay 7 ■■ Liability of Corporation for Pre-Incorporation Contracts • MED 2 of 49 Exams A corporation is NOT liable on pre-incorporation contracts entered into by a promoter UNLESS the corporation expressly or impliedly adopts the contract post-incorporation. A corporation may expressly adopt a pre-incorporation contract (i.e. by Board of Director action or by reference in the corporation’s formation documents). Implied adoption occurs when the corporation: (1) has reason to know or knows the material terms of the contract; AND (2) accepts some benefit from the contract. July 2005, Essay 2 July 1999, Essay 7 ■■ Defective Incorporation & Owner Liability • LOW 1 of 49 Exams • If corporate formation is defective, then the owners may be subject to personal liability for contracts or obligations under general partnership principles (since the owners are personally liable for ALL obligations of the partnership). If there is only one owner, similar personal liability would arise under sole-proprietorship principles. However, a person’s liability may be LIMITED under any of the following ways: © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2018, Essay 6 24 03 CORPORATIONS & LLC’S Under the RMBCA, a person is only personally liable for liabilities arising from their conduct when (1) he purports to act as or on behalf of a corporation, (2) knowing that no corporation was formed (actual knowledge is required). An erroneous “good faith” belief that the corporation was properly formed WILL NOT subject the person to liability. If multiple persons are liable, then each will be jointly and severally liable. o Under the De Facto Corporation doctrine, a defective corporation enjoys the same benefits and powers of a properly formed corporation – including limited liability. A de facto corporation exists where the entity: (1) made a good faith attempt to incorporate; (2) is otherwise eligible to incorporate; AND (3) took some action indicating that it considered itself a corporation. HOWEVER, only a person who was unaware that the corporation was not properly formed may assert the de facto corporation doctrine. o Under the Incorporation by Estoppel doctrine, any person or entity that treated a business as a corporation may be estopped from denying that the business is corporation, even if a valid corporation was NOT formed. The doctrine of incorporation by estoppel applies to BOTH: (a) third-parties that treated the business as a corporation; and (b) an entity that held itself out as a corporation and benefited from that claim. HOWEVER, the incorporation by estoppel doctrine DOES NOT apply to tort actions. The defective incorporation principles above apply to both active and inactive participants of the business o • D. Personal Liability & Piercing the Veil ■■ Personal Liability & Piercing the Veil • HIGH 5 of 49 Exams Generally, shareholders, directors, and officers are NOT personally liable for the liabilities and obligations of the corporation. However, courts may disregard the corporate form and hold individual corporate shareholders, directors, and officers personally liable for actions taken on behalf of the corporate entity. A court will pierce the corporate veil and hold the shareholders personally liable in the following situations: (1) the corporation is acting as the alter ego of the © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2013, Essay 6 July 2012, Essay 8 July 2007, Essay 9 Feb 2003, Essay 7 Feb 1998, Essay 6 25 03 CORPORATIONS & LLC’S • • • shareholders – where there is little or no separation between the shareholder and the corporation (i.e. where an individual utilizes the corporate form for personal reasons); (2) where the shareholders failed to follow corporate formalities; (3) the corporation was inadequately capitalized at its inception to cover debts and prospective liabilities; OR (4) to prevent fraud. A court is more likely to pierce the corporate veil for tort actions rather than contract disputes. Normally, passive investors who do not participate in the business will NOT be held liable, even if the court pierces the veil. The same factors are applied to hold a parent company liable for the acts of its subsidiary. Courts will generally apply the same factors above to pierce the veil of a Limited Liability Company and hold members or managers personally liable, BUT the failure to follow formalities is not a ground for piercing the LLC veil. Even if a court does not pierce the veil, a person is always personally liable for their own torts (i.e. negligence), even while acting as an agent for a corporation or organization. E. Corporate Finance ■■ Common & Preferred Shares • LOW 1 of 49 Exams • • Under the RMBCA, if the Articles of Incorporation authorize the issue of only one class of shares, it is not necessary to provide a designation for said shares. It’s understood that those shares will have both the power to vote and the power to receive the net assets of the corporation upon dissolution. If more than one class or series of shares is authorized, then the terms, preferences, rights, and limitations of each class of shares MUST be described in the Articles of Incorporation. All shares within a class or series must have the same rights, privileges, restrictions, and responsibilities. However, the RMBCA, allows variations within a class/series if it’s expressly set forth in the Articles of Incorporation. Generally, Common Shares provide shareholders with voting rights, although they are the last in priority to be entitled to a distribution of company assets. Shareholders with Preferred Shares are generally entitled to be paid out © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2000, Essay 7 26 03 CORPORATIONS & LLC’S from company assets upon dissolution before shareholders with common shares. However, Preferred Shares usually do not carry voting rights. In order for the corporation to issue Preferred Shares, the same must be described in the Articles of Incorporation. A class of shares with preferential dividend rights is entitled to receive dividends or distributions before other classes. ■■ Authorized, Outstanding, & Reacquired Shares • MED 2 of 49 Exams • • Authorized shares are the maximum number of shares a corporation may issue, as set forth in the Articles of Incorporation. A corporation is NOT allowed to issue more shares than authorized. To increase the number of shares allowed to be issued: (1) the Articles of Incorporation must be amended; (2) the changes must be adopted by the Board of Directors; AND (3) the changes must be approved by a majority vote of the shareholders. Outstanding shares are the total number of shares issued by the corporation and held by the shareholders. Under the RMBCA, each outstanding share is entitled to one vote (regardless of class), UNLESS otherwise provided in the Articles of Incorporation. Reacquired shares by the corporation (also called treasury shares) are considered authorized shares, but are not outstanding shares of the corporation. These reacquired shares are NOT allowed to be voted at a shareholders meeting. July 2010, Essay 9 Feb 2000, Essay 7 ■■ Consideration in Exchange for Shares • LOW 1 of 49 Exams • Under the RMBCA, shares may be issued in exchange for almost any type of consideration, including: money; tangible or intangible property; past performance of services to the corporation (including services in establishing the corporation); and future promises of service (i.e. stock options) or payment of money/property to the corporation. o Some states only allow shares to be issued in exchange for cash, property, or services previously rendered. The Board of Directors may determine the value of any nonmonetary consideration given, and absent fraud or bad faith, their determination is conclusive on the issue. The value determined is important in the context of a corporation whose Articles of Incorporation set a par value for shares, as shares CANNOT be issued for less than par value in that instance. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2000, Essay 7 27 03 CORPORATIONS & LLC’S ■■ Dividends & Distributions to Shareholders • MED 2 of 49 Exams • Decisions to declare dividends or make distributions to shareholders are within the discretion of the Board of Directors, and are normally protected under the business judgment rule. Only the Board of Directors have the power to issue dividends (an Officer cannot). Once a distribution is declared, the shareholder affected has a legal right to that distribution. Generally, a shareholder DOES NOT have the right to compel a corporation to issue a distribution (whether in the form of a dividend or otherwise), UNLESS such right is expressly granted in the Articles of Incorporation. However, a court will interfere with the Board’s discretion and order a dividend/distribution upon a showing: (1) of bad faith or dishonest purpose; AND (2) that funds were available for the dividend/distribution. o Examples of bad faith include: intense hostility to minority shareholders; exclusion of the minority from employment by the corporation; high salaries, bonuses, or corporate loans made to the officers in control; that the majority group may be subject to high personal income taxes if substantial dividends are paid; and a desire by the controlling directors to acquire the minority stock interests as cheaply as possible. Feb 2010, Essay 5 Feb 2005, Essay 1 F. Shareholders ■■ Shareholder Meetings: • MED 2 of 49 Exams • Right to Vote & Record Date Only shareholders that are registered shareholders on record date are entitled to vote at a shareholders meeting. Thus, the owner of shares on the record date is entitled to vote those shares at the upcoming shareholders meeting even if he sells the shares before the meeting occurs (the transferee is not entitled to vote). However, if the shareholder executed an irrevocable proxy in favor of the buyer of the shares, then the buyer (not the record date shareholder) will be able to vote the shares at the meeting. Under the RMBCA, the Bylaws may fix or provide the method of fixing the record date, BUT the record date cannot be more than 70 days prior to the shareholder meeting. If not otherwise fixed, the record date is the day before the first notice is delivered to shareholders. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2010, Essay 9 Feb 2001, Essay 7 28 03 CORPORATIONS & LLC’S ■■ Shareholder Meetings: • HIGH 4 of 49 Exams • • • Proxy Voting & Revocation of a Proxy Under the RMBCA, a shareholder may vote her shares at a shareholders meeting without physically attending the meeting through the use of a proxy. A valid proxy must be signed on: (a) an appointment form; OR (b) an electronic transmission. An oral proxy appointment is invalid. A proxy MUST be accepted if on its face there are no reasonable grounds to deny its genuineness and authenticity. An individual who is granted the power to vote another’s shares by a proxy MUST act in accordance with any agreement between the parties (if the shareholder directs the proxy holder to vote a certain way, then the proxy holder must do so). A shareholder may also grant a proxy holder the ability to vote shares as the proxy holder deems appropriate. A proxy is only valid for 11 months, unless the proxy provides otherwise. Proxy agreements are freely revocable by the shareholder, even if the proxy states that it is irrevocable (any action inconsistent with the grant of the proxy acts as a revocation). One exception to this rule is a proxy coupled with an interest or legal right, which is irrevocable if the proxy expressly states as such. Under the RMBCA, proxy appointments coupled with an interest include: (1) a pledgee (a person who lends money and accepts a pledge for the loan); (2) a person who purchased or agreed to purchase the shares; (3) a creditor of the corporation who extended it credit; (4) an employee of the corporation whose employment contract requires the appointment; or (5) a party to a voting agreement. July 2010, Essay 9 Feb 2006, Essay 5 July 2004, Essay 2 Feb 2001, Essay 7 ■■ Shareholder Meetings: Annual Meetings, Special Meetings, & Notice • LOW 1 of 49 Exams • Annual Meetings: A corporation shall hold an annual meeting of the shareholders at a date/time stated in the bylaws. Generally, the directors are elected at the annual meeting. Special Meetings: A special meeting is one held separate from the annual meeting, and may be called by: (a) the Board of Directors; (b) persons authorized under the Articles of Incorporation or Bylaws; OR (c) by the holders of at least 10% of all votes entitled to be cast at the meeting. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2006, Essay 5 29 03 CORPORATIONS & LLC’S A special meeting requires proper notice to the shareholders who are entitled to vote. Notice MUST: (1) be given at least 10 days in advance of the meeting (but not more than 60 days); (2) include a full description of the purpose of the meeting; AND (3) include the date, time, and place. If the meeting concerns a fundamental change in the corporation (i.e. dissolution), ALL shareholders (whether or not entitled to vote) are entitled to notice of the meeting. A shareholder may waive notice by: (a) delivering a signed writing to the corporation; OR (b) attending the meeting and not objecting at the beginning of the meeting (or by not objecting to a particular matter that is not within the purpose described in the meeting notice). o • ■■ Shareholder Meetings: • MED 2 of 49 Exams • A quorum MUST be present in order for the shareholders to take action at a meeting. Unless the Articles of Incorporation provide a greater number, a quorum exists when a majority of the shares entitled to vote are present. If a quorum exists, action on a matter (other than the election of directors) is approved if a majority of votes are cast in favor of the action UNLESS the articles of incorporation require a greater number of votes. Each outstanding share is entitled to one vote on every matter voted on at a shareholders meeting (unless the Articles of Incorporation provide otherwise). ■■ Shareholder Meetings: • LOW 1 of 49 Exams • Quorum & Voting Feb 2006, Essay 5 Feb 2001, Essay 7 Election of Directors Under the RMBCA (and most states), the candidates who receive the most votes (a plurality vote) will be elected as Directors at a shareholders meeting where a quorum is present, even if the Director(s) do not receive a majority of the votes. In some states, a majority of the vote is necessary. If the Articles of Incorporation provide for cumulative voting, each shareholder has a number of votes that is equal to the shares owned, multiplied by the number of director spots open for election (i.e. 100 shares owned x 3 nominees = 300 votes). A shareholder may cast all his votes for one director nominee rather than being limited to a maximum number of votes for each nominee. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2001, Essay 7 30 03 CORPORATIONS & LLC’S ■■ Shareholder’s Right to Inspect Books and Records • MED 2 of 49 Exams • • Under the RMBCA, a shareholder has the right to inspect and copy the corporation’s accounting records, excerpts the board of directors’ meeting minutes, and the record of shareholders if: (1) the inspection is made during regular business hours at the corporation’s principal office; (2) he provides 5-days written notice; (3) the demand is made in good faith and for a proper purpose; (4) he describes the purpose with particularity; AND (5) the records are directly connected with the purpose. The determination of the value of shares or whether the corporation has engaged in illegal conduct has been deemed to be a proper purpose. A shareholder may inspect the following records without providing a proper purpose: (i) Articles of Incorporation; (ii) Bylaws; (iii) resolutions by the Board of Directors; (iv) minutes of shareholder meetings for the past 3 years; (v) written communications sent to the shareholders within the last 3 years; (vi) names and business addresses of the current Directors and Officers; and (vi) its most recent annual report. The right of inspection CANNOT be abolished or limited by a corporation’s Articles of Incorporation or Bylaws. Feb 2017, Essay 4 Feb 2010, Essay 5 ■■ Shareholder Voting Agreements • LOW 1 of 49 Exams Under the RMBCA, shareholders may sign an agreement providing how they will vote their shares. A voting agreement is specifically enforceable, and a claim for breach of contract may be brought to enforce this right. July 1997, Essay 6 G. Directors ■■ Board of Directors Meeting: • LOW 1 of 49 Exams • Quorum Under the RMBCA, the Board of Directors can only act if a quorum is present. A majority of the Board of Directors is necessary to make a quorum, UNLESS there are provisions in the Articles of Incorporation stating that a higher or lower number is required. However, the Articles of Incorporation MUST require that at least one-third of the directors be present to make a quorum. A quorum must be present at the time when a vote is taken. If a quorum is present at the beginning of a meeting, but directors subsequently leave breaking the quorum before a vote, then the Board of Directors CANNOT vote or act. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2012, Essay 9 31 03 CORPORATIONS & LLC’S • The Board of Directors may permit any or all Directors to participate in regular or special meetings by any means of communication, BUT all directors participating must be able to simultaneously hear each other during the meeting. ■■ Board of Directors Meeting: • LOW 0 of 49 Exams • If a quorum of the Board of Directors is present when a vote is taken at a meeting, an act is approved by the affirmative vote of a majority of directors present UNLESS the Articles of Incorporation or bylaws require a greater number. A director who is present at a meeting of the Board of Directors when corporate action is taken is deemed to have assented to the action taken UNLESS: (a) the director objects at the beginning of the meeting (or promptly upon arrival) to holding it or transacting business at the meeting; (b) the dissent or abstention from the action taken is entered into the meeting minutes; OR (c) the director delivers written notice of the director’s dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. The right of dissent or abstention is NOT available to a director who votes in favor of the action taken. ■■ Board of Directors Meeting: • LOW 1 of 49 Exams • Voting & Objection to Actions 0 exams Notice & Waiver Under the RMBCA, the Board of Directors may hold regular or special meetings. Unless the Articles of Incorporation provide otherwise, regular meetings may be held without notice, whereas special meetings require at least two days’ notice. The notice must provide the date, time, and place of the special meeting (the purpose of the meeting is not required). A Director may waive notice in a signed writing. Waiver also occurs if the Director attends the meeting, UNLESS the Director: (1) objects at the beginning of the meeting (or promptly upon arrival); AND (2) does not vote at the meeting. Feb 2012, Essay 9 ■■ Board Action by Written Consent • LOW 1 of 49 Exams Generally, the Board of Directors can only take action at a meeting. However (unless the Articles of Incorporation or bylaws provide otherwise), action may be taken without a meeting by the Board of Directors if: (1) each director signs © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 1997, Essay 4 32 03 CORPORATIONS & LLC’S a consent describing the action to be taken; AND (2) delivers it to the corporation. A director may withdraw his consent by a signed revocation delivered to the corporation prior to the corporation receiving the written consents signed by the other directors. ■■ Removal of Directors • LOW 1 of 49 Exams • Under the RMBCA (and most states), shareholders may remove Directors with or without cause UNLESS the Articles of Incorporation only allow removal for cause. At common law, Directors could only be removed for cause. Cause to remove a director exists when that director violates a fiduciary duty, including engaging in self-dealing, usurping a corporate opportunity, or committing waste. o A director may be removed by the shareholders only at (1) a meeting called for the purpose of removing the director, and (2) the meeting notice must state that the purpose (or one of the purposes) of the meeting is removal of the director. If the corporation uses straight voting, then a director may be removed only if the number of votes cast to remove exceeds the number of votes cast not to remove the director. If cumulative voting is authorized, a director may be removed only if the number of votes for removal are greater than those needed to elect him. July 2004, Essay 2 H. Officers ■■ Authority of Officers • MED 3 of 49 Exams • • The Board of Directors may elect individuals as Officers (i.e. President, Vice-President, Secretary) to manage the dayto-day business of the corporation. An officer has actual authority to act consistently with their duties: (a) as outlined in the Bylaws; OR (b) as provided by the Board of Directors. An officer has apparent authority to bind the corporation when: (1) a third-party reasonably believes the person/entity has authority to act on behalf of the corporation; AND (2) that belief is traceable to the corporation’s manifestations (the corp. holds the officer out as having authority). The President of a corporation generally has implied authority to bind the corporation for matters within its ordinary course of business, BUT DOES NOT have authority to bind the corporation for extraordinary acts. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2005, Essay 1 Feb 1999, Essay 6 Feb 1997, Essay 4 33 03 CORPORATIONS & LLC’S An act or transaction is within the ordinary course of business if it’s normal and necessary for managing the business – a person would reasonably conclude the act is directly and necessarily embraced within the corporation’s business. Prosecuting a lawsuit in the name of the corporation is normally within the ordinary course of business. The Secretary of the corporation normally has the authority to maintain and authenticate the records of the corporation. o • ■■ Removal of Officers • LOW 1 of 49 Exams An Officer may be removed at any time with or without cause by: (a) the Board of Directors; (b) the Officer who appointed such Officer, unless the Bylaws or the Board of Directors provide otherwise; OR (c) any other Officer, if authorized by the Bylaws or the Board of Directors. An officer’s removal DOES NOT affect the officer’s contract rights (if any) with the corporation. July 1997, Essay 6 I. Members & Managers ■■ Management of an LLC • LOW 1 of 49 Exams • Under RULLCA, an LLC is presumed to be membermanaged UNLESS the Operating Agreement provides otherwise. A manager-managed LLC is run by an elected group of managers, who manage the business similarly to a board of directors. To constitute a manager-managed LLC, the Operating Agreement must state that the LLC will be manager-managed (i.e. that the LLC is “manager-managed”, “managed by managers”, or management is “vested in managers”). July 2016, Essay 1 ■■ Authority of Members and Managers of an LLC • LOW 1 of 49 Exams • Under RULLCA and general agency principles, each member or manager of an LLC generally has authority to bind the LLC for the purpose of its business (including entering into contracts). A member/manager has express actual authority to bind the LLC upon receiving said authority from the Operating Agreement or from the managing members/managers. The Operating Agreement may restrict certain activities without unanimous or majority consent (i.e. non-ordinary business transactions). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 1 34 03 CORPORATIONS & LLC’S Acts within the ordinary course of the LLC business need only be approved by a majority of the members. o While extraordinary acts (acts outside the ordinary course of business) may be undertaken only with the consent of ALL members. A member/manager has implied actual authority (also known as incidental authority) to take actions that are reasonably incidental or necessary to achieve the member/ manager’s authorized duties. A member/manager has apparent authority to bind the LLC for all acts apparently conducted within the ordinary course of the LLC’s business. A member/manager’s act will NOT bind the LLC if: (1) the member/manager lacked authority; AND (2) the third-party knew (actual knowledge) or had notice that the member/manager lacked authority. An act or transaction is within the ordinary course of business if it is normal and necessary for managing the business – a person would reasonably conclude the act is directly and necessarily embraced within the company’s business. o • • • J. Close Corporations & Control Devices ■■ Preemptive Rights • LOW 1 of 49 Exams • • A preemptive right is the right of an existing shareholder to maintain her percentage of ownership in the corporation by being offered the opportunity to purchase shares of the corporation issued for cash before outsiders are permitted to purchase them. Under the RMBCA, shareholders DO NOT enjoy preemptive rights unless such rights are explicitly granted in the corporation’s Articles of Incorporation. Additionally, preemptive rights DO NOT apply to: (1) shares issued as compensation; (2) shares issued to satisfy conversion or option rights created to provide compensation; (3) shares authorized in the Articles of Incorporation that are issued within 6 months of incorporation; (4) shares issued for consideration other than money; OR (5) shares issued without general voting rights but with preferential rights to distributions. Shareholders of common stock DO NOT have preemptive rights with respect to preferred shares unless the preferred shares are convertible into common shares. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2000, Essay 7 35 03 CORPORATIONS & LLC’S ■■ Restrictions on Share Transfers • LOW 1 of 49 Exams • • Under the RMBCA, the Articles of Incorporation, bylaws, and shareholder agreements may impose restrictions on the transfer of shares of the corporation for: (a) any reasonable purpose; (b) to preserve exemptions under federal or state securities law; OR (c) to maintain the corporation’s status when it is dependent on the number or identity of its shareholders. An absolute restraint on the transfer of shares is invalid. A restriction DOES NOT affect shares issued before the restriction was adopted UNLESS the holders of the shares are parties to the restriction agreement or voted in favor of it. Reasonable restrictions on the transfer of shares may be enforced against the transferor shareholder. However, a valid share transfer restriction 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. Under the RMBCA, the following restrictions are expressly allowed: (1) a right of first refusal (the shareholder must first offer the corporation or other shareholders an opportunity to buy the shares); (2) the obligation of the corporation or other persons to acquire the shares; (3) to require the corporation or certain shareholders/persons to approve the transfer of shares, if not manifestly unreasonable; and (4) to prohibit the transfer to designated persons or classes of persons, if not manifestly unreasonable. July 2000, Essay 4 K. Fiduciary Duties ■■ Fiduciary Duties of Directors: • HIGH 8 of 49 Exams Duty of Care Directors are fiduciaries of a corporation, and as such owe a duty of care to the corporation. This means that they must discharge their duties: (1) in good faith; (2) in a manner the Director reasonably believes to be in the best interests of the corporation; AND (3) with the care that a person in a like position would reasonably believe appropriate under similar circumstances. If this three-part test is satisfied, then a Director will NOT be liable for corporate decisions that resulted in adverse consequences to the corporation. Under the common law, the above test was known as the Business Judgment Rule. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 4 July 2015, Essay 4 Feb 2009, Essay 9 Feb 2008, Essay 5 July 2006, Essay 5 Feb 2001, Essay 7 July 1997, Essay 6 July 1995, Essay 4 36 03 CORPORATIONS & LLC’S • • • The duty of care requires that Directors be reasonably informed on the decisions they make. A Director may rely on the reasonable advice of advisors, such as attorneys, accountants, officers, or Committees of the Board when: (1) such reliance was reasonable; AND (2) the advisor or Committee was qualified to provide such advice. A party attacking a board decision must normally rebut the presumption that its business judgment was an informed one. However, the Business Judgment Rule DOES NOT apply or protect Directors: (i) financially interested in a transaction (a conflict of interest); (ii) not acting in good faith; OR (iii) who engaged in fraud or illegality. If a Director breaches the duty of care, he may be held personally liable to the corporation for any losses suffered as a result. ■■ Fiduciary Duties of Directors: • HIGH 5 of 49 Exams • • Duty of Loyalty A Director owes the corporation a fiduciary duty of loyalty, which means that the Director, in his dealings with the corporation, must act in the best interests of the corporation and without personal conflict. The duty of loyalty forbids Directors from: (a) entering into conflicting interest transactions; (b) usurping a corporate opportunity; (c) competing with the corporation; OR (d) trading on inside information. A conflicting interest transaction with the corporation is a breach of the duty of loyalty UNLESS the Director shows that: (a) it was approved by a majority of disinterested Directors after full disclosure of all relevant material facts; (b) it was approved by a majority of disinterested Shareholders after full disclosure of all relevant material facts; OR (c) the transaction as a whole was fair to the corporation at the time it was entered into (the price must be comparable to what the corporation would receive in an arm’s length transaction and the process followed by the Board was appropriate). The Business Judgment Rule DOES NOT apply or protect Directors financially interested in a transaction or who engaged in fraud or illegality. o Full disclosure occurs when the director discloses all known facts concerning the transaction that a reasonable person would believe necessary to make a decision. o A quorum must be present to vote on a conflicting interest transaction. This exists when a majority of disinterested directors is present (but there must be at least two disinterested directors to vote). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2015, Essay 4 Feb 2009, Essay 9 Feb 2008, Essay 5 Feb 2002, Essay 7 July 1995, Essay 4 37 03 CORPORATIONS & LLC’S • A conflict of interest occurs when the director/officer or a family member either: (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 reasonably be affected; OR (c) is involved with another entity (director, employee, owner, etc.) that is conducting business with the corporation and that transaction would normally be brought before the Board of Directors because of its importance to the corporation. ■■ Fiduciary Duties of Shareholders • LOW 1 of 49 Exams Generally, shareholders DO NOT owe fiduciary duties to fellow shareholders, and they can act in their own selfinterest. However, courts have found that controlling shareholders in close-corporations owe a fiduciary duty of loyalty and good faith and fair dealing to minority shareholders (which includes an obligation to disclose all material information). If any of these duties are breached, the controlling shareholder may be held liable to the minority shareholders for any losses caused by the breach. A closecorporation is one whose shares are not publicly traded and has only a small number of shareholders. July 2006, Essay 5 ■■ Restricting/Eliminating Fiduciary Duties in a Corporation • LOW 1 of 49 Exams • Under the RMBCA, the Articles of Incorporation may eliminate or limit the personal liability of a director for any action taken or not taken EXCEPT for: (a) financial benefits improperly received; (b) intentional infliction of harm on the corporation or its shareholders; (c) unlawful corporate distributions; or (d) an intentional violation of criminal law. Additionally, the Articles of Incorporation may provide for indemnification of a director for personal liability, except for the four instances noted above. Feb 2009, Essay 9 ■■ Fiduciary Duties Owed by Members/Managers of an LLC • MED 3 of 49 Exams Under RULLCA, a member of a Member-Managed LLC owes the fiduciary duties of care and loyalty to the company and its members. o Duty of Care: A member owes the duty of care to act: (1) with the care that a person in a like position would reasonably exercise under similar circumstances; AND (2) in a manner the member reasonably believes to be in the best interests of the company. If a member meets the requirements above, they CANNOT be held personally liable under the Business Judgment Rule. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2013, Essay 6 July 2012, Essay 8 July 2007, Essay 9 38 03 CORPORATIONS & LLC’S The duty of care requires that members be reasonably informed on the decisions they make. A member may rely in good faith upon opinions, reports, statements, or other information provided by another person that the member reasonably believes is a competent and reliable source for the information. o Duty of Loyalty: The duty of loyalty of a member includes the duties: (1) to account for any property, profit, or benefit the member derived from the LLC’s activities or property, or from appropriation of an LLC opportunity; (2) to refrain from dealing with the LLC when an adverse interest to the LLC exists (unless the transaction was fair to the LLC); AND (3) to refrain from competing with the LLC before its dissolution.  HOWEVER, after full disclosure of all material facts, ALL members may authorize an act or transaction that otherwise would violate the duty of loyalty. In a Manager-Managed LLC, the fiduciary duties of care and loyalty (as stated above) only apply to the managers, and NOT the members. The are two notable points concerning the duty of loyalty in Manager-Managed LLC: o First, only the members (not the managers) may authorize an act or transaction that otherwise would violate the duty of loyalty. o Second, a manager must refrain from competing with the LLC until winding up is completed (the duty does not end upon dissolution). Both members and managers MUST discharge their duties and exercise any rights consistently with the contractual obligation of good faith and fair dealing.  • • ■■ Restricting/Eliminating Fiduciary Duties in an LLC • LOW 1 of 49 Exams Under RULLCA, if not manifestly unreasonable, the Operating Agreement may: (1) restrict or eliminate the duty of loyalty; (2) identify activities that do not violate the duty of loyalty; (3) alter the duty of care (except to authorize intentional misconduct or a knowing violation of law); (4) alter or eliminate any other fiduciary duty (including eliminating particular aspects of that duty); and (5) prescribe the standards by which to measure the performance of the contractual obligation of good faith and fair dealing. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2013, Essay 6 39 03 CORPORATIONS & LLC’S L. Shareholder & Member Litigation ■■ Direct & Derivative Actions • HIGH 6 of 49 Exams • • • • A direct action involves an injury or breach of a duty owed to a shareholder of a corporation. A shareholder may bring a direct action against a director or officer, but MUST prove an actual injury that is NOT solely the result of an injury suffered by the corporation (i.e. an action to compel divided). Similarly, a member of an LLC may bring a direct action against another member, a manager, or the LLC, and MUST prove an actual/threatened injury that is not solely the result of an injury suffered by the LLC. The damages awarded in a direct action will be paid directly to the shareholder or member. In a derivative action, a shareholder is suing to enforce the corporation’s claim, not his own personal claim. The suit must be one in which the corporation could have brought itself, and has harmed the corporation in some way (i.e. loss suffered to corp.’s share value due to misleading statements by directors/officers). To commence or maintain a derivative suit under the RMBCA, the plaintiff-shareholder must meet the following requirements: (1) be a shareholder at the time of the act or omission or became a shareholder by operation of law from such a shareholder; (2) be a shareholder through entry of judgment; (3) he must fairly and adequately represent the interests of the corporation; AND (4) he must make a written demand upon the corporation to take suitable action. o A derivative suit CANNOT be commenced until 90 days after a written demand UNLESS: (a) the corporation rejects the demand; OR (b) the corporation will suffer irreparable harm if forced to wait. Under the RMBCA, there is NO exception to the demand requirement for futility. The damages awarded in a derivative action will be paid to the corporation (not the shareholder), but the shareholder may recover the reasonable cost of the litigation. To bring a derivative action on behalf of an LLC, the elements are the same (as those above) for a corporation EXCEPT: (1) the action may be brought within a reasonable time after the demand; and (2) the demand requirement may be waived if the demand is deemed futile. In a member-managed LLC, the demand must be made on the other members. In a manager-managed LLC, the demand must be made upon the managers. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2014, Essay 6 July 2012, Essay 8 Feb 2010, Essay 5 July 2007, Essay 9 July 1998, Essay 6 July 1997, Essay 6 40 03 CORPORATIONS & LLC’S ■■ Derivative Actions: • LOW 1 of 49 Exams Dismissal by the Board of Directors Under the RMBCA, a derivative proceeding MUST be dismissed by the court on motion by the corporation if (1) a majority of the board’s qualified directors (directors who do not have a material interest in the derivative action), (2) have determined in good faith, (3) after conducting a reasonable inquiry, (4) that the derivative proceeding is not in the best interests of the corporation. Some investigation is required by the Board of Directors to support their determination that the derivative action is not in the best interests of the corporation. Feb 2017, Essay 4 ■■ Federal Securities Law – Rule 10b-5 • LOW 1 of 49 Exams • Rule 10b-5 prohibits the use of any means or instrumentality of interstate commerce in any scheme to defraud, make material misrepresentations or omissions, or in any other way to use fraud in the purchase or sale of securities. In order for a plaintiff to prevail under a Rule 10b-5 claim, he must show that: (1) the defendant engaged in a fraudulent scheme or device; (2) which was relied upon; (3) in connection with the purchase or sale of a security; (4) acted with scienter (actual knowledge or recklessness); (5) used some means of interstate commerce; AND (6) caused damages. Non-trading defendants may also be held liable if fraud (based on misleading information) can be proven. o A fraudulent scheme or device includes: (a) misrepresentations of material facts; (b) insider trading (trading securities on the basis of inside information); OR (c) tipping (trading on material information received from an insider).  An insider is a person that discloses nonpublic information that a reasonable trader would want to know before buying/selling stock or abstaining from trading. One who receives insider information is only liable if he knows that an insider is giving him non-public information for an improper purpose. Reliance is presumed if a material omission is made. Material is defined as a statement or omission that creates a substantial likelihood that a reasonable investor would consider it important. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 1998, Essay 6 41 03 CORPORATIONS & LLC’S • In a Rule 10b-5 action, the plaintiff MUST either be: (a) the Securities and Exchange Commission (SEC); OR (b) connected to the purchase or sale of the securities at issue. M. Fundamental Corporate Changes ■■ Amending the Articles of Incorporation • MED 2 of 49 Exams • • Under the RMBCA, the Articles of Incorporation may be amended at any time, BUT ONLY IF the following procedures are followed: (1) adoption by the Board of Directors; (2) notice to each shareholder (whether or not entitled to vote) of a meeting to vote on the amendment – the notice must (a) state that a purpose of the meeting is to consider the amendment, and (b) provide a copy of the proposed amendment; (3) adoption by the shareholders by a majority vote (unless a greater number is required in the Articles of Incorporation or state law). However, there are two exceptions to the above rule: o First, the Board of Directors have the authority to make general minor amendments to the Articles without shareholder approval. o Second, the Board of Directors (or its incorporators if it has no board of directors) may adopt any amendment to the Articles of Incorporation without shareholder approval if a corporation has not yet issued shares. Class voting is required if the amendment would affect shares of the class, including a change of all or part of the class into a different number of shares of the same class. Feb 2000, Essay 7 July 1996, Essay 7 ■■ Mergers and Share Exchanges • LOW 1 of 49 Exams • Under the RMBCA, the approval of a merger requires: (1) approval by the Board of Directors of both corporations; AND (2) shareholder approval of both corporations by a majority vote (unless a greater number is required by state law or the Articles of Incorporation). Shareholder approval by the surviving corporation is NOT required for a merger if: (1) the corporation’s Articles of Incorporation will not be changed; (2) the shareholders’ number of outstanding shares will not change; AND (3) the voting power of any shares issued as a result of the merger is 20% or less of the voting power of the surviving corporation. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2003, Essay 1 42 03 CORPORATIONS & LLC’S • • A short form merger occurs when a parent corporation merges with its own subsidiary corporation. If the parent corporation owns at least 90 percent of a subsidiary’s outstanding (voting) shares, then only the Board of Directors of the parent corporation has to approve the merger. Approval is NOT REQUIRED from the: (a) shareholders of the parent corporation; (b) the Board of Directors of the subsidiary; or (c) the shareholders of the subsidiary. The approval of a share exchange requires: (1) approval by the Board of Directors of both corporations; AND (2) shareholder approval of the acquired corporation by a majority vote (unless a greater number is required by state law or the Articles of Incorporation). Shareholder approval is NOT required for the acquiring corporation. ■■ Sale of All or Substantially All of Corporate Assets • MED 3 of 49 Exams • A sale of all or substantially all of the corporation’s assets is deemed a fundamental change if the sale is NOT in the usual and regular course of business. Under the RMBCA, the following procedure MUST be followed by the corporation for a fundamental change: (1) adoption by the Board of Directors; (2) notice to each shareholder (whether or not entitled to vote) of a meeting to vote on the proposal – the notice must state the purpose of the meeting; (3) adoption by the shareholders by a majority vote (unless a greater number is required in the Articles of Incorporation or state law). Feb 1999, Essay 6 July 1996, Essay 7 July 1995, Essay 4 ■■ Dissenter’s Appraisal Rights for Fundamental Changes • MED 3 of 49 Exams A dissenting shareholder is entitled to appraisal rights, and to obtain payment of the fair market value of his shares, for the following fundamental changes: (1) when the shareholder has the right to vote on the merger plan; (2) when he is a shareholder of the subsidiary in a short form merger; (3) when he is a shareholder of a corporation whose shares are being acquired in a share exchange; (4) when the shareholder has the right to vote on the distribution of all or substantially all of the corporate assets; and (5) when an amendment to the Articles of Incorporation materially and adversely affects the shareholder’s rights. o Appraisal rights are NOT available to shareholders of publicly traded companies. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2003, Essay 1 Feb 1999, Essay 6 July 1996, Essay 7 43 03 CORPORATIONS & LLC’S • Shareholders who DO NOT consent to a fundamental corporate change may force the corporation to purchase their shares if: (1) the shareholder gave notice to the corporation of his intent to demand payment if the change was approved; (2) the notice was given before the vote was taken on the fundamental change; (3) the fundamental change is effectuated; AND (4) the shareholder did not vote in favor of the change. If the corporation and the dissenter cannot agree on a fair price, the court will resolve the issue. N. Dissolution & Dissociation ■■ Judicial Dissolution of a Corporation • LOW 1 of 49 Exams • Under the RMBCA, a shareholder may petition the court to dissolve the corporation if he can show: (a) a deadlock of the Directors in the management of corporate affairs and irreparable injury to the corporation; (b) the Directors have acted in a manner that is illegal, oppressive, or fraudulent; (c) the shareholders are deadlocked in voting power and have failed to elect Directors for at least two consecutive annual meetings; OR (d) the corporate assets have been wasted or misapplied. o Oppressive conduct includes violating a shareholder’s reasonable expectations or preventing minority shareholders from having equal rights and opportunities in the corporation. In a judicial dissolution proceeding, the corporation or shareholders may elect to purchase all shares owned by the petitioning shareholder at fair value. This election is generally irrevocable. July 2000, Essay 4 ■■ Voluntary Dissolution of a Corporation • MED 2 of 49 Exams Under the RMBCA, a corporation’s Board of Directors may propose dissolution to the shareholders. The following procedure MUST be followed by the corporation for the proposal to be adopted: (1) adoption by the Board of Directors; (2) notice to each shareholder (whether or not entitled to vote) of a meeting to vote on the proposal – the notice must state the purpose of the meeting; AND (3) adoption by the shareholders by a majority vote (unless a greater amount is required in the Articles of Incorporation or state law). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2006, Essay 5 July 1996, Essay 7 44 03 CORPORATIONS & LLC’S • A corporation may be dissolved by a majority of the incorporators or initial directors if: (1) the corporation has NOT issued shares or commenced business; AND (2) Articles of Dissolution are filed with the Secretary of State. ■■ Dissociation of a Member from an LLC • LOW • 1 of 49 Exams • • • Under RULLCA, a person has the power to dissociate as a member of the LLC at any time (rightfully or wrongfully). A member becomes dissociated from the LLC upon: (1) notice of the member’s express will to withdraw; (2) occurrence of an agreed upon event in the Operating Agreement; (3) expulsion pursuant to the Operating Agreement; (4) expulsion by the unanimous vote of the other members if it’s (a) unlawful to carry on the LLC business with that member, or (b) there has been a transfer of all or substantially all of that member’s transferable interest in the LLC (other than a transfer for security purposes); (5) by judicial order for misconduct; (6) bankruptcy; (7) incapacity or death; (8) appointment of a personal representative or receiver; OR (9) termination of the entity member (who is not an individual, partnership, LLC, corporation, trust, or estate). Upon dissociation, the member loses his right to participate in management of the LLC. However, the dissociated member will have a right to receive distributions from the LLC if issued. The dissociated member has no right to payment for his LLC interest, unless the Operating Agreement provides otherwise. A person’s dissociation is deemed wrongful when it is: (a) in breach of the Operating Agreement; OR (b) occurs before the termination of the LLC and (i) the person withdraws as a member by express will; (ii) the person is expelled as a member by judicial order; (iii) the person becomes a debtor in bankruptcy; (iv) the person is expelled; or (v) the member entity is willfully dissolved or terminated. A person that wrongfully dissociates as a member is liable to the LLC and other members for damages caused by the dissociation. Under RULLCA, dissociation of a member DOES NOT result in dissolution of the LLC. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 1 45 03 CORPORATIONS & LLC’S ■■ Dissolution & Winding Up of an LLC • MED 2 of 49 Exams • • Under RULLCA, an LLC is dissolved upon: (a) the occurrence of an event in the Operating Agreement causing dissolution; (b) the consent of all members; (c) the passage of 90 consecutive days during which the LLC has no members; or (d) judicial dissolution of the LLC. A court may grant judicial dissolution of an LLC upon an application by a member on any of the following grounds: (a) that the managers or controlling members have/will/are acting in a manner that is illegal or fraudulent; (b) that the managers or controlling members have/are acting in a manner that is oppressive and directly harmful to the member; (c) the conduct of all or substantially all of the LLC’s activities is unlawful; OR (d) it is not reasonably practicable to carry on the LLC’s activities in conformity with the Certificate of Organization and the Operating Agreement. Upon dissolution, the LLC’s activities must be wound up. As part of the winding up process, the LLC must provide notice of the dissolution to creditors. Under RULLCA, the notice sent to creditors must set forth the steps that are necessary for enforcing their claims against the dissolving LLC. If proper dissolution and winding up procedures are NOT followed, then a creditor’s claim may be enforced against: (1) the dissolved LLC; and (2) the members personally if the assets of the company have been distributed after dissolution (but such liability cannot exceed the total value of assets distributed to said member post-dissolution). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2013, Essay 6 July 2012, Essay 8 46 04 CIVIL PROCEDURE A. Federal Subject Matter Jurisdiction ■■ Subject Matter Jurisdiction: • HIGH 10 of 49 Exams • HIGH 19 of 49 Exams • Federal Question A federal court can only hear cases where it has subject matter jurisdiction, because it is a court of limited jurisdiction. A federal court has subject matter jurisdiction if: (a) there is a federal question; (b) there is diversity of citizenship among the parties; OR (c) supplemental jurisdiction is present. Subject matter jurisdiction is not waived if a party fails to raise it at trial. It may be raised at any time, even on appeal. Federal Question Jurisdiction exists if a well-pleaded Complaint alleges a claim that arises under: (a) federal law; (b) the U.S. Constitution; OR (c) United States treaties. The plaintiff MUST be enforcing a federal right, and the federal question of law must be present on the face of the Complaint. Raising a defense under a federal law is NOT sufficient to trigger federal question jurisdiction. ■■ Subject Matter Jurisdiction: • MEE TIP Diversity of Citizenship A federal court can only hear cases where it has subject matter jurisdiction, because it is a court of limited jurisdiction. A federal court has subject matter jurisdiction to hear a claim if: (a) there is a federal question; (b) there is diversity of citizenship among the parties; OR (c) supplemental jurisdiction is present. Subject matter jurisdiction is not waived if a party fails to raise it at trial. It may be raised at any time, even on appeal. Diversity of Citizenship Jurisdiction exists when: (1) there is complete diversity of citizenship between all plaintiffs and defendants (no plaintiff can be from the same state as any defendant); AND (2) the amount in controversy exceeds $75,000. However, jurisdiction DOES NOT exist for cases among aliens (both the plaintiff and defendant are aliens), unless U.S. citizens are present on both sides of the action. Diversity jurisdiction is determined at the time the action is commenced; a post-filing change of citizenship is irrelevant absent bad faith. o Citizenship: A party’s citizenship is determined by their domicile.  For a natural person, domicile is determined by the party’s: (1) residence (physical presence in the state); AND (2) subjective intent to make the state their permanent © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 On the exam, assume the application of: (1) the Federal Rules of Civil Procedure; AND (2) federal statues pertaining to trial jurisdiction, appellate jurisdiction, venue, and transfer. July 2016, Essay 6 July 2015, Essay 2 Feb 2015, Essay 5 Feb 2011, Essay 8 July 2010, Essay 7 Feb 2010, Essay 6 Feb 2006, Essay 3 Feb 2004, Essay 4 Feb 2002, Essay 1 July 1997, Essay 5 MEE TIP In the past, most MEE questions have generally asked: “Does the court have subject matter jurisdiction?” In such a situation, you will need to analyze Federal Question Jurisdiction, Diversity of Citizenship Jurisdiction, and Supplemental Jurisdiction. MEE TIP On the exam, apply the appropriate domicile test based on the person/entity described in the essay question. 47 04 CIVIL PROCEDURE o home. The above test also applies to permanent resident aliens. If a person resides in more than one state for an extended period of time, then the court will review factors, such as the person’s residence, voter registration/records, vehicle registration, location of bank accounts, and place of employment. Domicile continues until changed. Both residence and intent must be established concurrently for a change in domicile; the mere change of one without the other is not sufficient.  A corporation has dual citizenship, and is deemed to be a domiciliary of: (1) the state of its principal place of business (the corporation’s “nerve center” – where officers direct, control, and coordinate the corporation’s activities); AND (2) any state where it is incorporated. Usually, a corporation’s principal place of business is its designated headquarters.  An executor or personal representative is deemed to have the citizenship of the decedent or person being represented.  A partnership, sole-proprietorship, or unincorporated association is deemed to be a domiciliary of the state of every partner/ member/owner. Amount in Controversy: The amount in controversy is based on the damages alleged in good faith in the Complaint (not the actual award), unless it is legally certain that the plaintiff cannot recover the specified amount. A plaintiff may aggregate his claims against one defendant, or against multiple defendants if all are joint tortfeasors (where the defendants are jointly and severally liable). A claim for injunctive relief is valued by either the benefit to the plaintiff OR the cost of compliance for the defendant (the value of the injunction). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 4 July 2016, Essay 6 July 2015, Essay 2 Feb 2015, Essay 5 July 2013, Essay 1 Feb 2012, Essay 7 Feb 2011, Essay 8 July 2010, Essay 7 Feb 2010, Essay 6 July 2009, Essay 6 July 2008, Essay 5 July 2007, Essay 2 Feb 2006, Essay 3 Feb 2005, Essay 3 July 2004, Essay 6 Feb 2004, Essay 4 Feb 2002, Essay 1 Feb 2000, Essay 3 July 1997, Essay 5 48 04 CIVIL PROCEDURE ■■ Subject Matter Jurisdiction: • HIGH 8 of 49 Exams • A federal court can only hear cases where it has subject matter jurisdiction, because it is a court of limited jurisdiction. A federal court has subject matter jurisdiction to hear a claim if: (a) there is a federal question; (b) there is diversity of citizenship among the parties; OR (c) supplemental jurisdiction is present. Supplemental Jurisdiction: If a federal court has original jurisdiction (subject matter jurisdiction) over some of the claims in the action, then it may exercise supplemental jurisdiction over additional state court claims when they arise from the same “case or controversy”. Generally, such claims must arise from a common nucleus of operative fact (the same transaction or occurrence). However, several limitations exist. o Supplemental jurisdiction is limited in that it CANNOT be used to overcome a lack of diversity (a plaintiff in a diversity case CANNOT assert supplemental jurisdiction if it would violate complete diversity). Additionally, under federal statute, a court CANNOT have supplemental jurisdiction over claims against third-parties. o A federal court may decline to exercise supplemental jurisdiction over State claims when: (a) the claim raises a novel or complex issue of State law; (b) the claim substantially predominates over the claim(s) of which the district court had original jurisdiction; (c) the federal district court has dismissed all claims over which it had original jurisdiction; OR (d) in exceptional circumstances. State claims do not substantially predominate over federal claims when the facts needed to prove each claim are identical or similar. ■■ Subject Matter Jurisdiction: • LOW 1 of 49 Exams • Supplemental Jurisdiction July 2016, Essay 6 July 2015, Essay 2 Feb 2011, Essay 8 July 2009, Essay 6 July 2008, Essay 5 Feb 2005, Essay 3 Feb 2004, Essay 4 Feb 2002, Essay 1 Domestic Relations Exception Under the Domestic Relations Exception, federal courts MUST decline jurisdiction (even when diversity or federal question is present), when the case primarily involves domestic relations matters (applies to cases encompassing the issuance of a divorce, alimony, or child custody). A court should NOT decline jurisdiction when domestic relations issues are ancillary to the case. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2010, Essay 6 49 04 CIVIL PROCEDURE B. Removal ■■ Removal • HIGH 4 of 49 Exams • A defendant may remove a case to a federal court sitting in the State where the claim was filed if: (1) the federal court has subject matter jurisdiction (original jurisdiction); (2) all defendants agree; (3) no defendant is a resident of the forum state; AND (4) removal is sought within 30 days of either service of the Summons or receiving the initial pleading (whichever period is shorter). A plaintiff CANNOT remove a case to federal court. In addition, a case CANNOT be removed more than one year after commencement in a diversity action. Procedurally, to remove an action to federal court the defendant must file a Notice of Removal in the federal court district within the state where the action is pending. The notice MUST: (1) state the basis for federal court jurisdiction; AND (2) include copies of the documents filed in the State court action. The defendant must serve the Notice of Removal upon all parties, and file a copy with the state court. Removal is automatic, and the state court may take no further action in the case once it receives the Notice of Removal. Feb 2012, Essay 7 July 2009, Essay 6 July 2007, Essay 2 Feb 1996, Essay 4 C. Abstention Doctrines ■■ Abstention Doctrines • MED 2 of 49 Exams • • A federal court may abstain from hearing a case when doing so would intrude upon the powers of another court. In addition, a federal court may stay a case arising from ambiguous state law to await the outcome of another pending state court case that may resolve the ambiguity. Under the Pullman doctrine, federal courts have discretion to abstain from hearing cases that arise from unsettled areas of state law, allowing the state’s highest court to decide the matter first. The doctrine is applicable when the federal court is presented with an ambiguous state law and a state court interpretation of the matter may remove the need to decide the case on federal grounds. Under the Younger doctrine, federal courts may abstain from hearing constitutional challenges to State action when doing so would interfere with state judicial proceedings. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2003, Essay 4 July 1997, Essay 5 50 04 CIVIL PROCEDURE • • Under the Colorado River doctrine, federal courts should abstain from hearing cases when there are parallel state and federal litigations pending. Suits are parallel when the parties and issues in the cases are substantially the same. Under the Burford doctrine, abstention is appropriate only if federal adjudication would interfere with a state’s administration of a complex regulatory scheme. D. Personal Jurisdiction ■■ Personal Jurisdiction • HIGH 9 of 49 Exams • • A federal court MUST have personal jurisdiction over a defendant for its judgment to be binding. A federal court can exercise personal jurisdiction to the same extent as the State courts where the federal district court is located. Jurisdiction over a defendant normally falls into two categories: (1) the traditional bases of jurisdiction; and (2) a State’s long-arm statute. Traditional Bases of Jurisdiction: The traditional bases for asserting personal jurisdiction include: (a) domicile; (b) transient jurisdiction (presence in the State when served); (c) consent; or (d) waiver (appearing in the action without objecting to jurisdiction). The above grounds comport with the Constitutional requirements of due process. Long-Arm Jurisdiction: To exert personal jurisdiction over a defendant who is not a resident of the forum state: (1) the forum state must have a long arm statute; AND (2) the Constitutional requirements of due process must be met. Where a state’s long-arm statute allows personal jurisdiction to the same extent as the Constitution, then the long-arm analysis is the same as the constitutional analysis, which requires: (1) that the defendant have sufficient minimum contacts with the forum state, (2) so as not to offend traditional notions of fair play and substantial justice. Both prongs must be satisfied. o Prong 1 – Minimum Contacts (Contacts & Relatedness): Sufficient minimum contacts exist when either general jurisdiction OR specific jurisdiction is present. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 4 July 2016, Essay 6 July 2015, Essay 2 July 2013, Essay 1 July 2010, Essay 7 Feb 2006, Essay 3 Feb 2000, Essay 3 Feb 1999, Essay 4 Feb 1995, Essay 6 MEE TIP Depending on the call of the question and the fact pattern, you will need apply one or both of the following rules. Generally, when a state’s long-arm statute is present in the fact pattern, you will need to apply the Long-Arm Jurisdiction rule. When no longarm statute is present, you will likely apply the Traditional Bases of Jurisdiction rule. 51 04 CIVIL PROCEDURE   General jurisdiction exists when the defendant’s contacts with the forum state are so substantial and of such nature that the defendant is essentially at home in the state. The claim DOES NOT need to relate to or arise from the defendant’s contacts in the forum state. An individual must be domiciled in the state for general jurisdiction to apply. For a corporation, general jurisdiction applies where the corporation is fairly regarded as “at home” (usually where the corporation is incorporated or headquartered). Specific jurisdiction exists when the suit arises out of or relates to the defendant’s contacts with the forum state. There MUST be a connection between the forum state and the underlying controversy (principally, an activity or an occurrence that takes place in the forum state). When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the state.  Regularly occurring sales of a product in a state DOES NOT justify the exercise of jurisdiction over a claim unrelated to those sales.  With respect to conduct via the internet, a court will consider how interactive the website is. Generally, the more interactive a website is, the more likely a court will find personal jurisdiction. A passive website (one that contains only information) has been held to be insufficient to subject the owner to jurisdiction. Courts have held jurisdiction to be proper where defendants could reasonably anticipate that defamatory comments posted online would target readers in plaintiff’s home state. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 52 04 CIVIL PROCEDURE o Prong 2 – Fair Play and Substantial Justice (Fairness):  Even if the minimum contacts test is met, it MUST be fair and reasonable for the defendant to be sued in the forum state (so that traditional notions of fair play and substantial justice are not offended).  However, the burden is on the defendant to show that it would be so unreasonable to defend himself in the forum state that it would constitute a violation of Due Process. The court will consider: the burden on the defendant of litigating in the forum state, the state’s interest in providing a forum; the plaintiff’s interest in a convenient forum for obtaining relief; and the interests of the judicial system to efficiently resolve disputes. E. Service of Process and Notice ■■ Service of Process and Notice • HIGH 4 of 49 Exams • • In federal court, the Summons and Complaint must be served upon the defendant within 90 days of filing the Complaint. Otherwise, the court MUST either: (a) dismiss the action without prejudice against that defendant; OR (b) order that service be made within a specified time. However, if the plaintiff shows good cause for failing to serve within 90 days, the court MUST extend the time for service for an appropriate period. Service may be made by any person who: (1) is at least 18 years old; AND (2) not a party to the action. The method of service must be consistent with the Due Process Clause, which requires that notice be reasonably calculated to make the parties aware of the action and give them an opportunity to object. o Service upon an Individual: An individual may be served by delivering the Summons and Complaint: (a) to the individual personally; (b) to someone of suitable age and discretion at the individual’s current dwelling or usual place of abode; (c) to an agent authorized by appointment or by law to receive service of process; OR (d) in accordance with the state law of the forum state or where service is made. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 6 Feb 2015, Essay 5 Feb 2009, Essay 5 July 1995, Essay 6 MEE TIP On the exam, apply the appropriate method of service of process based upon the type of party and method of service mentioned in the essay question. 53 04 CIVIL PROCEDURE o o Service upon a Corporation, Partnership, or Association: A corporation, partnership, or unincorporated association may be served: (a) in accordance with state law of the forum state or where service is made; OR (b) by delivering the Summons and Complaint to an officer (i.e. CEO), managing agent, general agent, or authorized agent (by appointment or by law) of the corporation. Service upon a Foreign Defendant: Generally, a foreign defendant may be served by any manner not prohibited by international agreement. However, a foreign corporation, partnership, or association CANNOT be served by personal service. A court CAN authorize service via e-mail if: (1) no international agreement prohibits it; AND (2) it satisfies due process (reasonably calculated to notify the defendant of the action and give him an opportunity to object). F. Venue ■■ Venue (Proper Venue & Transfer of Venue) • HIGH 11 of 49 Exams Proper Venue: For civil actions brought in federal court, venue is proper in any district where: (a) any defendant resides (if all defendants are residents of the forum state); (b) where a substantial portion of the claim occurred; (c) where a substantial part of property is located (where property is the subject of the action); OR (d) if none of the above apply, then venue is proper in any judicial district in which any defendant is subject to the court’s personal jurisdiction. Proper venue is determined at the time the suit is filed; a subsequent move by a party DOES NOT generally warrant a change of venue. o Residence Rules: Residence of an individual is determined by their domicile (residence and intent to make the place their permanent home). A business entity’s residence includes ALL districts where it is subject to personal jurisdiction. A non-resident of the U.S. (alien or U.S. citizen living outside the U.S.) may be sued in any judicial district. o For tort actions, venue is proper where the alleged tortious acts occurred, but venue is NOT proper where the only connection is that medical treatment for injuries was received in the judicial district. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 5 July 2016, Essay 6 July 2013, Essay 1 Feb 2012, Essay 7 Feb 2005, Essay 3 July 2002, Essay 3 Feb 2002, Essay 1 Feb 2000, Essay 3 Feb 1999, Essay 4 Feb 1996, Essay 4 July 1995, Essay 3 MEE TIP On the exam, apply the applicable transfer of venue rule based upon whether venue was proper or improper when the case was filed, and/or whether a forum-selection clause is at issue. 54 04 CIVIL PROCEDURE • Transfer of Venue: Transfer of venue and the applicable law depends on whether venue was proper when the suit was first filed. o If venue was proper when the case was filed, the court MAY transfer venue if: (1) needed for the convenience of parties and witnesses or interests of justice; AND (2) the action could have initially been brought in the receiving court (proper venue, subject matter jurisdiction, and personal jurisdiction). The court has discretion whether or not to transfer the case. Following a transfer, the new court MUST apply the same substantive law as the original transferor court. o 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. Following a transfer, the law applied is that of the new transferee court. o Forum-Selection Clause: Generally, a court will enforce a contractual forum-selection clause to transfer venue, UNLESS special factors are present (i.e. significant/unusual hardships or inequality of bargaining power). Additionally, the Supreme Court has held that a forum-selection clause is an important factor favoring a change of venue, even if the forumselection clause is unenforceable under the applicable state law. G. Law Applied by Federal Courts ■■ Law Applied by Federal Courts: Erie Doctrine, Substance vs. Procedure, & Supremacy Clause • HIGH 6 of 49 Exams The Erie doctrine applies when a federal case is brought under diversity of citizenship jurisdiction. Under the Erie doctrine, a federal court will apply its own federal procedural laws, but must apply state substantive law. o Procedural laws include: civil procedure rules, statute of limitations, burden of proof, and rebuttable presumptions. o Substantive laws include: choice of law rules, statute of frauds, irrebuttable presumptions, damages, statute of limitations that condition a substantive right, and statute of limitations where a borrowing statute was enacted (a statute providing the shorter of the two time-periods applies). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 6 Feb 2012, Essay 7 Feb 2009, Essay 5 July 1999, Essay 3 Feb 1997, Essay 5 July 1995, Essay 3 55 04 CIVIL PROCEDURE • • Since choice of law rules are considered substantive law, a federal court sitting in diversity MUST apply the forum state’s choice of law rules to determine the applicable state substantive law in the action. Once the applicable state law is determined, the federal court must apply that law as the state court would; it CANNOT make its own independent judgment on the construction of a law or statute. When no controlling state case law is available to the federal court for guidance, the court must predict how the state’s highest court would rule on the issue. However, federal law will apply for matters governed by the U.S. Constitution, laws passed by Congress, or valid federal law that preempts state law under the Supremacy Clause. H. Preliminary Injunctions & Temporary Restraining Orders ■■ Preliminary Injunction • MED 2 of 49 Exams • A preliminary injunction maintains the status quo pending the outcome of an action in order to protect irreparable harm to a party. The court may issue a preliminary injunction only: (1) upon notice to the adverse party; AND (2) if the moving party gives security in an amount the court deems proper (which will be used to reimburse the non-moving party for any injury caused by the injunction if the moving party does not succeed on the merits). The Federal Rules of Civil Procedure allow the court to issue both a restraining injunction (preventing a party from doing something) OR a mandatory injunction (compelling a party to do something). Under the traditional four-prong test for a preliminary injunction, the party moving for an injunction must show: (1) a likelihood of success on the merits; (2) a likely threat of irreparable harm to the movant; (3) the harm alleged by the movant outweighs any harm to the non-moving party; AND (4) an injunction is in the public interest. If the moving party has an adequate remedy at law (can be compensated by money damages for any potential loss), then a motion for a preliminary injunction should be denied. Courts have granted preliminary injunctions in the following instances: environmental damage cases (because such harm is often deemed irreparable); and to enforce non-competition agreements restricting former employees from soliciting customers. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2014, Essay 4 July 2005, Essay 6 56 04 CIVIL PROCEDURE ■■ Temporary Restraining Order (TRO) • MED 3 of 49 Exams • • A Temporary Restraining Order (TRO) is an emergency remedy used to maintain the status quo pending the outcome of a hearing or application (usually a preliminary injunction application), and is only available when the plaintiff will suffer immediate and irreparable harm. A TRO can only be granted for a limited amount of time, so a party must move for a preliminary injunction if it seeks to maintain the status quo pending the outcome of the action. When deciding to grant a TRO, a court will analyze the same factors as a preliminary injunction. The moving party must show: (1) a likelihood of success on the merits; (2) a likely threat of irreparable harm to the movant; (3) the harm alleged by the movant outweighs any harm to the non-moving party; AND (4) an injunction is in the public interest. If granted, the moving party must give security in an amount the court deems proper. A TRO can be issued ex parte (without notice to an adverse party). o For an ex parte TRO, the plaintiff or his attorney MUST: (1) provide specific facts in sworn statement that clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; AND (2) certify in writing any efforts made to give notice to the adverse party or why notice should not be required. o An ex parte TRO automatically expires after 14 days (unless the court sets a shorter expiration). However, a court can extend the expiration of the TRO: (a) for good cause; OR (b) if the opposing party consents to the extension. An adverse party may move to dissolve or modify an ex parte TRO on two-day’s notice to the moving party. July 2014, Essay 4 July 2005, Essay 6 Feb 1997, Essay 5 I. Pleadings ■■ Amendments to Pleadings & Relation Back Doctrine • MED 3 of 49 Exams A party may amend a pleading once as of right within 21 days after service of: (a) the original pleading; OR (b) a responsive pleading or pre-answer motion to the original pleading. In all other cases, a party can only amend a pleading: (a) with the opposing party’s written consent; OR (b) with leave of the court upon motion, which should be freely given when justice so requires. Usually, a party will © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 6 July 2012, Essay 7 July 2006, Essay 6 57 04 CIVIL PROCEDURE • • make a motion to amend a pleading to add claims, parties, or affirmative defenses. o Amendment to Add Affirmative Defenses: In responding to a pleading, a party must set forth all affirmative defenses to the claims alleged. If the party fails to do so and wishes to add an affirmative defense, the pleading MUST be amended. The following defenses are deemed waived if not included in the defendant’s first response (answer or preanswer motion) to the Complaint: (1) lack of personal jurisdiction; (2) improper venue; (3) insufficient process; AND (4) insufficient service of process. o However, courts have allowed a motion to be amended to include a defense or objection inadvertently omitted (even for waivable defenses) provided that such action is prompt AND prior to any hearing on the original motion (i.e. two days after original motion and before the hearing on the motion). An amendment to a pleading relates back to the date of the original pleading when: (a) the amendment asserts a claim or defense that arose out of the same conduct, transaction, or occurrence as the original pleading allegations; OR (b) the law that provides the applicable statute of limitations allows the relation back. HOWEVER, an amendment to change a party or party name only relates back if: (1) the amendment concerns the same conduct, transaction, or occurrence as the original pleading allegations; (2) the new party received notice of the original action within 90 days of filing so that it will not be prejudiced in defending on the merits; AND (3) the new party knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity. ■■ Counterclaims • MED 2 of 49 Exams • • A counterclaim is a claim brought by a defendant against a plaintiff. There are two types of counterclaims: permissive and compulsory. A pleading MAY state a permissive counterclaim, which is a counterclaim against an opposing party that is not compulsory. A compulsory counterclaim MUST be stated in the party’s pleading, or is otherwise deemed waived. A compulsory counterclaim is a claim that: (1) arises out of the same transaction or occurrence as the opposing party’s © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2008, Essay 5 July 2007, Essay 2 58 04 CIVIL PROCEDURE claim; AND (2) the claim does not require adding another party whom the court cannot acquire jurisdiction. o Same Transaction or Occurrence Test: To determine whether two claims arise out of the same transaction or occurrence for counterclaim purposes, federal courts look at four factors: (1) whether the issues of fact and law raised by the claim and counterclaim are largely the same; (2) whether res judicata would bar a subsequent suit on the counterclaim; (3) whether substantially the same evidence supports or refutes plaintiff’s claim and defendant’s counterclaim; and (4) whether there is any logical relation between the claim and counterclaim. o The presence of any of the above factors supports that the counterclaim arises out of the same transaction or occurrence as the original claim. ■■ Cross-Claims • LOW 1 of 49 Exams • A pleading may state a claim against a co-party (i.e. codefendant) as a cross-claim if the claim arises out of the same transaction or occurrence as the original action or counterclaim. The cross-claim may include a claim that a co-party is liable for claims asserted against it (i.e. indemnification, contribution). To determine whether two claims arise out of the same transaction or occurrence for cross-claim purposes, federal courts look at four factors: (1) whether the issues of fact and law raised by the claim and cross-claim are largely the same; (2) whether res judicata would bar a subsequent suit on the cross-claim; (3) whether substantially the same evidence supports or refutes plaintiff’s claim and defendant’s cross-claim; and (4) whether there is any logical relation between the claim and cross-claim. The presence of any of the above factors supports that the cross-claim arises out of the same transaction or occurrence as the original claim. Feb 2011, Essay 8 J. Rule 11 ■■ Rule 11 – Representations to the Court • MED 2 of 49 Exams Under Rule 11, all papers served in the litigation (i.e. pleadings, motions) MUST be signed by an attorney of record (or by a party personally, if the party is unrepresented). When presenting the same to the court, that party certifies that: (1) it is not being presented for any © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 5 Feb 1995, Essay 3 59 04 CIVIL PROCEDURE • improper purpose (to harass, cause unnecessary delay, or needlessly increase the cost of litigation); (2) the claims, defenses, and other legal contentions are warranted and non-frivolous; (3) the factual contentions have evidentiary support or will likely have evidentiary support after further discovery; AND (4) the denials of factual contentions are warranted or reasonably based on lack of information. The above certification must be to the best of the person’s knowledge, information, and belief (formed after an inquiry reasonable under the circumstances). Rule 11 DOES NOT apply to discovery (disclosures, discovery requests, responses, objections) OR discovery motions. ■■ Rule 11 – Sanctions Imposed • MED 2 of 49 Exams • • Whether a Rule 11 violation has occurred and what sanctions (if any) to impose are matters within the discretion of the trial court. Sanctions Against an Attorney/Party/Law Firm: The court (by motion or on its own) may issue sanctions against an attorney, law firm, or party for failing to comply with Rule 11. Absent exceptional circumstances, a law firm is jointly responsible for a violation committed by its partner, associate, or employee. A court CANNOT issue monetary sanctions against a client for an unwarranted claim, defense, or legal contention made by their attorney. Nature of Sanctions: A sanction imposed under this rule must be limited to what will deter repetition of similar conduct, and may include: (i) non-monetary directives (i.e. striking paper/pleading, reprimand, censure, referring matter to disciplinary authority); (ii) an order to pay a penalty into court; or (iii) an order directing payment to the movant of all or part of the reasonable attorney’s fees and other expenses directly resulting from the violation (if imposed on motion and warranted for effective deterrence). o In determining what sanction to impose, the court may consider any relevant factor, including: if the conduct was willful, negligent, or a pattern of activity; what effect it had on the litigation and the pleading; and whether the person was an attorney. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 5 Feb 1995, Essay 3 60 04 CIVIL PROCEDURE ■■ Rule 11 – Procedure for Filing a Sanctions Motion • LOW 1 of 49 Exams A party CANNOT file a Rule 11 motion for sanctions with the court without first (1) serving the motion on the offending party, and (2) then giving their opponent 21 days to withdraw or correct the offending pleading or paper. If the 21-day period passes, and the motion/paper is not withdrawn or corrected, the motion may be filed with the court. The motion must be made separately (from other motions), and must describe the conduct in violation of Rule 11. Feb 2018, Essay 5 K. Joinder of Parties and Claims ■■ Permissive Joinder of Parties • MED 3 of 49 Exams • • • Multiple Plaintiffs: Under the Federal Rules of Civil Procedure, multiple plaintiffs MAY join in one action if: (1) joint and several relief is asserted by them or the claim arises out of the same transaction or occurrence; (2) a common question of law or fact to all plaintiffs exists; AND (3) subject matter jurisdiction exists for each claim. Multiple Defendants: Multiple defendants MAY be joined in one action if: (1) joint and several relief is asserted against them or the claim arises out of the same transaction or occurrence; (2) a common question of law or fact to all defendants exists; AND (3) subject matter jurisdiction exists for each claim. Under the logical relationship test, all logically related events entitling a person to institute a legal action against another are generally within the meaning of “transaction and occurrence” for permissive joinder. Misjoinder of parties is NOT a ground for dismissing an action. Instead, the court may add or drop a party on just terms. The court may also sever any claim against a party. MEE TIP On the exam, apply the appropriate joinder rule(s) depending on the parties (plaintiffs or defendants) joined in the action. Feb 2010, Essay 6 July 2009, Essay 6 Feb 2004, Essay 4 ■■ Required Joinder of Parties • MED 2 of 49 Exams A party MUST be joined in an action if: (1) that party is a necessary party; AND (2) joinder is feasible. If a party has not been joined as required, the court MUST order that the party be joined to the action. A party who refuses to join as a plaintiff may be joined as either a defendant or an involuntary plaintiff. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2008, Essay 5 July 1998, Essay 3 61 04 CIVIL PROCEDURE • • • A party is necessary if: (a) the court cannot grant complete relief among existing parties without the absent party; (b) the absent party claims an interest in the action that would be impaired or impeded (as a practical matter) if that person is not joined; OR (c) the party’s absence would leave an existing party subject to a substantial risk of multiple liability or inconsistent obligations. Courts have held joint tortfeasors to be permissive, not necessary parties. Joinder is feasible when: (1) joinder will not remove subject matter jurisdiction; AND (2) the court has personal jurisdiction over the necessary party. If joinder is NOT feasible, the court will consider the following factors when deciding whether to continue or dismiss the action: (1) the extent to which a judgment in the party’s absence might prejudice that party or the existing parties; (2) the extent to which any prejudice could be lessened or avoided; (3) whether an adequate judgment in the party’s absence could be rendered; and (4) whether the plaintiff would have an adequate remedy if the action were dismissed. ■■ Intervention as of Right & Permissive Intervention • LOW • 1 of 49 Exams • The Federal Rules of Civil Procedure provide two avenues for non-party intervention in an action. Intervention as of Right: A court MUST permit intervention as a matter of right if the non-party can demonstrate: (1) the application to intervene is timely; (2) an interest in the subject matter of the action; (3) that the protection of this interest would be impaired because of the action; AND (4) that the non-party’s interest is not adequately represented by existing parties to the litigation. The above-test is satisfied whenever disposition of the action would put the non-party at a practical disadvantage in protecting its interest. In addition, a non-party has the right to intervene when a federal statute provides an unconditional right to do so. Permissive Intervention: If intervention of right is not warranted, a court MAY still allow a non-party to intervene permissively where the non-party: (1) files a timely motion; AND (2) either (a) has a claim or defense that shares a common question of law or fact with the main action; or (b) is given a conditional right to intervene by a federal statute. However, under permissive intervention, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties’ rights. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2014, Essay 4 62 04 CIVIL PROCEDURE ■■ Impleader (Third-Party Actions) • LOW 1 of 49 Exams • The Federal Rules of Civil Procedure allows a defendant to bring a third-party into an action ONLY IF (1) the thirdparty is or may be liable to the defendant, (2) for all or part of a judgment against the defendant in the action. Claims merely arising out of the same transaction or occurrence are insufficient UNLESS some derivative liability exists (i.e. indemnification or contribution). To commence an action against a third-party, the defendant (third-party plaintiff) must serve a Summons and ThirdParty Complaint upon the third-party. Leave of the court is REQUIRED if the defendant seeks to file the Third-Party Complaint more than 14 days after serving its original Answer. Feb 2015, Essay 5 ■■ Class Action Requirements & Certification • LOW 1 of 49 Exams • • One or more representative members of a class may sue or be sued on behalf of the entire class if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; AND (4) the representative parties (including counsel) will fairly and adequately protect the interests of the class. These are known as the requirements of numerosity, commonality, typicality, and adequacy of representation. Once the above four requirements are met, the class will be certified if: (a) separate actions would create a risk of inconsistent adjudications or harm the interests of other class members; (b) the party opposing the class has acted or refused to act on grounds that apply generally to the class and the grounds of relief would be appropriate to the class as a whole; OR (c) common questions of law or fact to the class members predominate over any questions affecting individual members and a class action is superior to other available methods to adjudicate the case. Courts are reluctant to grant class certification for personal injury claims where the plaintiffs have highly individualized injuries or where personal injury claims are grouped with non-personal injury claims. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2003, Essay 4 63 04 CIVIL PROCEDURE L. Discovery ■■ Discoverable Information (Relevant & Proportional Standard) • LOW 1 of 49 Exams • • A party in a lawsuit may obtain discovery of all nonprivileged information that is: (1) relevant to any party’s claim or defense; AND (2) proportional to the needs of the case. Information within the scope of discovery need not be admissible in evidence to be discoverable. o Proportionality is determined by considering: (1) the importance of the issues at stake in the action; (2) the amount in controversy; (3) the parties’ relative access to relevant information; (4) the parties’ resources; (5) the importance of the discovery in resolving the issues; and (6) whether the burden or expense of the proposed discovery outweighs its likely benefit. When discovery is resisted for reasons related to confidentiality or privacy, the court must balance the interest of the party seeking disclosure against the interests of the party resisting disclosure. In such a situation, a court has discretion to limit the scope of discovery, order an in camera review of documents to determine if they contain sensitive information, or order discovery subject to a confidentiality order. Personnel records have been held to be discoverable. Once a person reasonably anticipates litigation, that person has a duty to preserve ALL relevant evidence and cannot destroy the same, even if litigation has not yet been commenced. Federal courts have the inherent power to sanction parties for any abuse of the judicial process, including destroying or failing to preserve relevant evidence. Feb 2007, Essay 3 ■■ Depositions • LOW 1 of 49 Exams A party is permitted to conduct up to 10 depositions. Without leave of court, a party is permitted to conduct a deposition of any person or party so long as the deposition is: (1) limited to one day of no more than 7 hours; AND (2) proper notice is given. Unless the parties have stipulated otherwise, a party MUST obtain leave of the court: (a) to take more than 10 depositions; (b) if the person has already been deposed; OR (c) if it is seeking a deposition before the parties “meet and confer” (the Rule 26(f) conference). An entity (i.e. corporation) must designate a person to represent it for a deposition, and may designate different people to testify on different topics. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2002, Essay 3 64 04 CIVIL PROCEDURE • • Notice: A party who wants to depose a person by oral questions must give reasonable written notice to every party to the action. The notice must state the time and place of the deposition, and the deponent’s name and address (if known). If the name is unknown, the notice must provide a general description sufficient to identify the person or the particular class or group to which the person belongs. No Subpoena Required to Depose a Party: A subpoena is NOT required to depose an opposing party. A party may be subject to sanctions for (a) failing to appear or (b) failing to provide the deponent for a deposition, even if the party is beyond the court’s subpoena power. ■■ Electronically Stored Information & Spoliation Sanctions • LOW 1 of 49 Exams • • A party in a lawsuit may obtain discovery of all nonprivileged information that is: (1) relevant to any party’s claim or defense; AND (2) proportional to the needs of the case. This includes electronically stored information (ESI), such as e-mails, text messages, and digital files. When a party anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents. A party may be sanctioned under Rule 37(e) for failing to preserve ESI only if: (1) the ESI should have been preserved in the anticipation of litigation; (2) the party failed to take reasonable steps to preserve it; AND (3) it cannot be restored or replaced through additional discovery. Only when all three elements are met, the rule is applicable. If Rule 37(e) applies, then: (a) the court may order measures to cure any prejudice to a party; OR (b) if the party acted intentionally, the court may: (i) presume that the lost information was unfavorable to the party; (ii) instruct the jury that it may or must presume the information was unfavorable to the party; (iii) dismiss the action; or (iv) enter a default judgment. Feb 2014, Essay 4 ■■ Rule 26(g) – Signing Disclosures & Sanctions for Improper Certification • LOW 1 of 49 Exams Under Rule 26(g), all discovery papers served in the litigation (discovery requests, responses, objections, or disclosure) MUST be signed by an attorney of record (or by a party personally, if the party is unrepresented). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 1995, Essay 3 65 04 CIVIL PROCEDURE When signing any disclosure, the party certifies that it is complete and correct as of the time it was made. o When signing any other discovery document, the party certifies that it is: (1) consistent with the Federal Rules of Civil Procedure and is non-frivolous; (2) not being presented for any improper purpose (to harass, cause unnecessary delay, or needlessly increase the cost of litigation); AND (3) not unreasonable, unduly burdensome, or unduly expensive considering the case, issues at stake, and prior discovery. The court (by motion or on its own) may issue sanctions against an attorney, law firm, or party for failing to comply with Rule 26(g). If a person violates this rule without substantial justification, the court MUST impose an appropriate sanction, which includes ordering the violating party or attorney to pay the reasonable expenses, including attorney’s fees, caused by the violation. o • ■■ Rule 26(a) Initial Disclosures • LOW 1 of 49 Exams • Without awaiting a discovery request, a party MUST provide the following initial disclosures to the other parties: (1) the contact information of individuals likely to have discoverable information and the information they are likely to possess; (2) a copy or description of all documents, electronically stored information, and tangible things the party may use to support its claims or defenses (unless the use would be solely for impeachment); (3) computation of each category of damages claimed by the disclosing party; AND (4) any insurance agreement that may be liable to satisfy a possible judgment in the action. The above disclosures MUST be made within 14 days after the Rule 26(f) conference between the parties. If a party fails to provide any of the above disclosures, that party is NOT allowed to use that witness or information on a motion, at a hearing, or at a trial UNLESS the failure was substantially justified or is harmless. Feb 2001, Essay 5 ■■ Attorney Work Product Doctrine • MED 3 of 49 Exams A party in a lawsuit may obtain discovery of all nonprivileged information that is: (1) relevant to any party’s claim or defense; AND (2) proportional to the needs of the case. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2014, Essay 4 Feb 2007, Essay 3 Feb 1995, Essay 3 66 04 CIVIL PROCEDURE • • The attorney work product doctrine protects ALL materials prepared by an attorney or his agents in anticipation of or during litigation. Such materials are protected from disclosure UNLESS a party can show that: (1) a substantial need for the materials exists; AND (2) a substantial equivalent of the materials cannot be obtained without undue hardship. o An insurance company’s investigative report of an insured’s claim is generally not considered to have been prepared in anticipation of litigation because it’s not prepared in response to a threat of immediate litigation. When a party claims that requested information is protected as work product, the party must disclose the existence of the material in sufficient detail to enable other parties to assess the claim of privilege (known as a privilege log). M. Pretrial Conference and Order ■■ Pretrial Conference and Order • MED 3 of 49 Exams • • • • The court may order the attorneys and any pro-se parties to appear for one or more Pretrial Conferences to control the management of the case, including scheduling or to discuss settlement. Scheduling Order: The court must issue a scheduling order (except for certain actions exempted by local rule): (a) after receiving the parties’ report for the Rule 26(f) conference; OR (b) after consulting with the parties’ attorneys and any unrepresented parties at a scheduling conference. Modifying a Scheduling Order: The schedule in a Scheduling Order may be modified only: (1) for good cause; AND (2) with the judge’s consent. Attendance at Pretrial Conferences: A represented party must authorize at least one of its attorneys to appear for a pretrial conference. Sanctions: The court (on motion or on its own) may issue sanctions if a party or its attorney: (a) fails to appear; (b) is substantially unprepared to participate; (c) does not participate in good faith; OR (d) fails to obey a scheduling or other pretrial order. Sanctions the court may issue include: (i) prohibiting the disobedient party from supporting or opposing designated claims or defenses; (ii) striking all or part of the pleadings; (ii) dismissing all or part of the action; or (iv) rendering a default judgment against the disobedient party. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP On the exam, apply the specific Pretrial Conference & Order rule(s) based upon the fact pattern and the call of the essay question. July 2006, Essay 6 Feb 2001, Essay 5 July 2000, Essay 3 67 04 CIVIL PROCEDURE • • Pretrial Orders: After any pretrial conference, the court may issue an order reciting the action taken. This order controls the course of the action unless the court subsequently modifies it. Final Pretrial Conference and Orders: The court may hold a final pretrial conference to formulate a trial plan, including a plan to facilitate the admission of evidence. Under the Federal Rules of Civil Procedure, a court may issue an order specifying the issues to be heard at trial. The conference must be held as close to the start of trial as is reasonable, and must be attended by at least one attorney who will conduct the trial for each party and by any unrepresented party. The court may modify the Final Pretrial Conference Order only to prevent manifest injustice. The rule for modifying a Final Pretrial Order takes precedence over the standard to amend a pleading. N. Motions ■■ Motion to Dismiss & Motion for Judgment on the Pleadings • HIGH 4 of 49 Exams • • Motion to Dismiss: Under Rule 12(b), a Motion to Dismiss may be made prior to filing an Answer. A Motion to Dismiss requires the court to: (1) consider the facts in the light most favorable to the non-moving party; AND (2) determine whether there is any basis upon which relief can be granted for the non-moving party. If there is any basis for relief, the court MUST deny the motion. The Court DOES NOT evaluate the merits of the case. Motion for Judgment on the Pleadings: A motion for any non-waivable defense may be made at any time early enough NOT to delay trial. However, it is referred to as a Motion for Judgment on the Pleadings if it is made after the defendant has answered. Grounds for Motion and Waiver: A party may bring a motion in order to dismiss one or more claims on certain specified grounds. Such grounds include: (1) lack of subject matter jurisdiction; (2) lack of personal jurisdiction; (3) improper venue; (4) insufficient process; (5) insufficient service of process; (6) failure to state a claim upon which relief can be granted; and (7) failure to join a necessary party. The grounds listed in (2)-(5) above are deemed waived if NOT raised in the first responsive pleading or Motion to Dismiss. A motion for lack of subject-matter jurisdiction cannot be waived, and may be made at any time, even on appeal. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 6 Feb 2011, Essay 8 July 2004, Essay 6 July 1995, Essay 6 68 04 CIVIL PROCEDURE ■■ Motion for Summary Judgment • HIGH 5 of 49 Exams • • • A court will grant a Motion for Summary Judgment when: (1) there is no genuine issue of material fact; AND (2) the movant is entitled to judgment as a matter of law. When reviewing the motion, the court MUST view the evidence in the light most favorable to the non-moving party. o An issue of material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. o As to materiality, only disputes over facts that might affect the outcome of the suit will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will NOT be counted. Where the moving party presents evidence of facts that would defeat the non-moving party’s claim, the non-moving party MUST offer evidence of specific facts showing that there is a genuine issue for trial by affidavits or other evidence. A party may move for summary judgment on the entire case OR on certain issues (partial summary judgment), and may file the motion at any time until 30 days after the close of all discovery (unless a different time is set by local rule or court order). 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 Motion for Summary Judgment. When this occurs, all parties must be given a reasonable opportunity to present evidence that is pertinent to the motion. July 2012, Essay 7 Feb 2003, Essay 5 Feb 1998, Essay 4 July 1996, Essay 4 July 1995, Essay 6 ■■ Motion for Judgment as a Matter of Law • MED 3 of 49 Exams A Motion for Judgment as a Matter of Law (JMOL) may be made at any time before the case is submitted to the jury. The motion must specify the judgment sought and the law and facts that entitle the movant to the judgment. The motion will be granted if: (1) the non-moving party has been fully heard on an 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. A motion for JMOL was formerly known as a Motion for Directed Verdict. o On a motion for JMOL, the court MUST draw all reasonable inferences in the light most favorable to the opposing party, and cannot substitute other inferences that might be regarded as more © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2008, Essay 6 July 2000, Essay 3 July 1999, Essay 3 69 04 CIVIL PROCEDURE • • reasonable. It is the function of the jury as the traditional finder of the facts, and not for the Court, to weigh conflicting evidence and inferences, and determine the credibility of witnesses. Thus, a court CANNOT reverse a denial of a motion for JMOL unless the jury’s factual findings are: (a) not supported by substantial evidence; OR (b) if the legal conclusions from the verdict are not supported by the factual findings. A party may renew its motion for JMOL only if that party moved for JMOL before the case was submitted to the jury. A renewed motion for JMOL must be filed within 28 days of the entry of judgment. In ruling on the renewed motion, the court may: (a) allow judgment on the verdict (if the jury returned a verdict); (b) order a new trial; OR (c) direct the entry of JMOL. A motion for Renewed JMOL was formerly known as a Motion for Judgment Notwithstanding the Verdict. A court may wisely reserve ruling on a motion for JMOL made at the close of the evidence for a post-verdict decision because a jury verdict may moot the issue and because a pre-verdict ruling gambles a reversal that may result in a new trial. ■■ Motion for a New Trial • LOW 1 of 49 Exams • A Motion for a New Trial MUST be filed no later than 28 days after the entry of judgment. The court may grant a Motion for a New Trial on the entire case or on particular issues for any reason for which a new trial has been previously granted in federal court. Such reasons include: (1) an error at trial that makes the judgment unfair (i.e. incorrect jury instructions or evidentiary ruling); (2) new evidence surfaced that could not have been obtained with due diligence for the original trial; (3) prejudicial misconduct of a party, attorney, third-party, or juror; (4) the judgment was against the weight of evidence; or (5) the verdict was excessive or inadequate. Since the credibility of witnesses is for the jury to decide, it is an invasion of the jury’s province to grant a new trial merely because the evidence was sharply in conflict. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2008, Essay 6 70 04 CIVIL PROCEDURE O. Verdicts and Judgments ■■ Preclusive Effect of a Default Judgment • LOW 1 of 49 Exams • A default judgment will have a preclusive effect if the rendering court had jurisdiction over the claims and the parties to the action (both subject matter jurisdiction and personal jurisdiction). A state court MUST give a judgment rendered in a federal diversity action the same effect it would accord a judgment rendered in a state court under state law. States vary as to the extent of preclusion a default judgment is given. However, a default judgment bars a party from asserting compulsory counterclaims that could have been raised in the original action. July 2007, Essay 2 P. Claim Preclusion & Issue Preclusion ■■ Claim Preclusion (Res Judicata) • MED 2 of 49 Exams • • Claim Preclusion (res judicata) precludes the parties in an action from subsequently re-litigating any claim that was or could have been raised in that action. Claim preclusion has four elements: (1) the parties are identical or in privity; (2) the judgment in the prior action was rendered by a court of competent jurisdiction; (3) the prior action was concluded by a final judgment on the merits; AND (4) the same claim was involved in both actions (the claim arises out of the same transaction or occurrence as the previously litigated claim). Separate Actions Against Joint Tortfeasors: A plaintiff CAN bring separate actions against alleged joint tortfeasors whose liability are joint and several, but CANNOT bring separate actions for joint tortfeasors whose liability is derivative. Parties in Privity: Generally, only a party to the first action is bound by the prior judgment. However, an exception exists when the party in the second action was in sufficient privity with a party in the first action. The Supreme Court has found sufficient privity in the following situations: (1) a party who agrees to be bound by the action; (2) a substantive legal relationship between the two parties (i.e. preceding and succeeding property owners, bailee and bailor, and assignee and assignor); (3) a party that was adequately represented in a class action or by a trustee, guardian, or other fiduciary; (4) the party assumed control over the first action; (5) a party © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2013, Essay 5 Feb 2003, Essay 5 MEE TIP On the exam, if the party in the second action was NOT a party in the first action, then apply those specific claim preclusion rule(s). 71 04 CIVIL PROCEDURE seeking to re-litigate through a proxy; and (6) when a special statutory scheme expressly forecloses successive litigation by non-parties (i.e. bankruptcy and probate proceedings). Close family relationships by themselves are NOT sufficient to establish privity. ■■ Issue Preclusion (Collateral Estoppel) • MED 3 of 49 Exams • • 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. Issue preclusion may be invoked if: (1) a valid and final judgment was rendered in the first action; (2) the issue is identical to the issue decided in the prior action; (3) the issue was actually litigated, determined, and essential in the prior action; AND (4) the party against whom enforcement is sought against had a full and fair opportunity to litigate the issue in the first action. Issue preclusion may be used both to defend a claim/action and on offense to support a claim/action. Additionally, issue preclusion may be used even if the second action contains a new claim. A judgment entered pursuant to settlement CANNOT be used for issue preclusion purposes because no determination by the court was made. Generally, a non-party to the first action CAN assert issue preclusion against a party to that action if the four-part test above is satisfied. However, the Supreme Court has suggested that issue preclusion is NOT appropriate where a plaintiff in the new action (who was a non-party in the first action) could have easily joined the first action. Feb 2013, Essay 5 Feb 2003, Essay 5 July 2001, Essay 7 Q. Appeals ■■ Appeals: • HIGH 4 of 49 Exams • Final Judgment Rule & Exceptions Final Judgment Rule: In federal court, a party may only appeal from a final judgment or decision (known as the “final judgment rule”). A final judgment/decision is one which ends the litigation on the merits (all claims are resolved), and leaves nothing for the court to do but execute the judgment. Appeal is thereby precluded from any decision that adjudicates some but not all claims in the action, as well as from any decision which is tentative, informal, or incomplete. Appeals must be filed within 30 days after entry of the judgment appealed from. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2011, Essay 5 July 2006, Essay 6 July 2001, Essay 7 Feb 1996, Essay 4 MEE TIP On the exam, apply any applicable exceptions to the Final Judgment Rule based upon the fact pattern and the call of the essay question. 72 04 CIVIL PROCEDURE • Several exceptions to the final judgment rule exist: o Rule 54(b) Exception: Under the Federal Rules of Civil Procedure, an appeal is allowed when: (1) the action has multiple parties or multiple claims; (2) the court directs entry of a final judgment for some of the claims or parties; AND (3) the court expressly determines that there is no just reason for delay. If all the above elements are NOT met, then any appeal must wait until after a final judgment for the entire case. o Statutory Exceptions: Under federal law, a party may immediately appeal certain court orders as of right relating to: (i) injunctions; (ii) receiverships; (iii) orders affecting the possession of property; (iv) liability in an admiralty action; and (v) patent infringement orders which would be final except for an accounting. o Certified Appeal Exception: Under federal law, 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. The application for an appeal under this rule must be made within ten days after the entry of the order.  A judge will typically certify an appeal when the order involves: (i) a controlling question of law, (ii) which there is substantial ground for difference of opinion, and (iii) an immediate appeal may materially advance the ultimate termination of the litigation. o Collateral Order Doctrine: The collateral order doctrine allows an immediate appeal when the interlocutory order: (1) conclusively determines the disputed question; (2) resolves an important issue completely separate from the merits of the action; AND (3) is effectively unreviewable on appeal from a final judgment. This doctrine will only apply to a small class of decisions. The Supreme Court has held that the collateral order doctrine DOES NOT allow an interlocutory order concerning the enforcement of a forum selection clause because the order is not effectively unreviewable on appeal from final judgment. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 73 04 CIVIL PROCEDURE o o o Writs of Mandamus and Prohibition: When there is an abuse of judicial authority by a trial court, a party may seek a writ of mandamus or prohibition to have a federal appellate court review the trial court’s ruling. However, the writ of mandamus (an application for the court to act) or writ of prohibition (an application for the court to end litigation) are issued only in exceptional circumstances. A party CANNOT use the writ of mandamus or prohibition to correct an ordinary error by the district court. The party seeking mandamus/prohibition has the burden of showing that its right to issuance of the writ is clear and indisputable.  The writs have been invoked when a court acts outside its jurisdiction or when the court fails to follow court rules. Such instances have included: (i) unwarranted judicial action threatened to embarrass the Executive Branch in conducting foreign relations; (ii) it was the only means of forestalling intrusion by the federal courts on a delicate area of federal-state relations; (iii) it was necessary to confine a lower court to the appellate court’s mandate; and (iv) where a district judge displayed a persistent disregard of the Rules of Civil Procedure. Pendent Appellate Jurisdiction: Under the doctrine of pendent appellate jurisdiction, a party may seek to have a non-final order reviewed along with another appealable order currently pending before the appellate court. However, the doctrine is only appropriate when: (a) a non-appealable decision is inextricably intertwined with an appealable decision; OR (b) when review of the non-appealable decision is necessary to ensure a meaningful review of the appealable decision. Certification of Class Action: Under the Federal Rules of Civil Procedure, an order granting or denying class-action certification may be appealed when: (1) a petition for permission to appeal is filed within 14 days after the order is entered; AND (2) the Court of Appeals agrees to hear the appeal (the court has discretion). An appeal does not stay proceedings in the district court unless the district court judge or the Court of Appeals so orders it. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 74 05 CONFLICT OF LAWS MEE TIP MEE TIP Pay particular attention to the essay question, as it may instruct you which choice of law approach to apply or analyze. For example, on the July 2017 MEE (Essay 6), the question provided the approaches used by the two states (i.e. “State A follows the Restatement (Second) of Conflict of Laws.” and “…State B follows the lex loci contractus approach to choice of law in contract matters.”). On the exam, Conflict of Laws issues are tested in combination with other subject areas (i.e. civil procedure), and do not appear as stand-alone essay questions. In addition, on the Feb. 2009 MEE (Essay 5), the question provided the approaches used by the two states (i.e. “To address choice-oflaw problems, State A follows the “most significant relationship” approach of the Restatement (Second) of Conflict of Laws. State B applies the “vested rights” approach of the Restatement (First) of Conflict of Laws.”). If no guidance is given as to what approach to use, then analyze all three choice of law theories in conjunction with the specific rules for the type of action/issue (i.e. tort, contracts, real property, forum selection clause, etc.). A. Choice of Law Theories ■■ Choice of Law Theories: • MED 2 of 49 Exams Under the traditional vested rights approach, the law of the state in which the transaction or event occurred is applied (i.e. the place of the wrong or injury, where the contract was formed or is to be performed, or where the real property is located). ■■ Choice of Law Theories: • HIGH 3 of 49 Exams HIGH 3 of 49 Exams July 2008, Essay 7 July 1998, Essay 3 Most Significant Relationship Approach Under the Restatement (Second) of Conflict of Laws, the laws of the state having the most significant relationship to the transaction and the parties will govern the action. Under this approach, courts consider various factors dependent on the type of action (i.e. torts) to determine the state that has the most significant relationship to the action. ■■ Choice of Law Theories: • Traditional Vested Rights Approach Feb 2009, Essay 5 July 2008, Essay 7 July 1998, Essay 3 Interest Analysis Approach Under the governmental interest analysis approach, the court weighs the interests of the states involved. Specifically, the court (i) examines the connections that each state has to the parties and the © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 1998, Essay 3 Feb 1997, Essay 5 July 1995, Essay 3 75 05 CONFLICT OF LAWS • • events of the litigation, (ii) analyzes the difference between the state laws, (iii) pinpoints the underlying policies behind those state laws, and (iv) then applies the facts to the law to determine which state has a greater interest in having its law applied. To determine which state has the greater interest, a threestep process is used: o Step 1: If the court finds that one state has an interest in the application of its policy based on the circumstances and the other state has none, it should apply the law of only the interested state. o Step 2: If the court finds an apparent conflict between the interests of the two states, it should reconsider to see if a more moderate and restrained interpretation of the policy or interest of one state may avoid the conflict. o Step 3: If, upon reconsideration, the court finds that a conflict between the legitimate interests of the two states is unavoidable (a true conflict), it should apply the law of the forum state. This approach DOES NOT change depending on the type of action involved (i.e. contract, tort, property). B. Application in Specific Areas ■■ Choice of Law Rules: • LOW 1 of 49 Exams • Torts Under the traditional vested rights approach, the applicable law is that of the place of the wrong (i.e. where the injury occurred) for a tort action. Under the most significant relationship approach of the Restatement (Second) Conflict of Laws, a court must consider the following factors: (1) where the injury occurred; (2) where the conduct causing the injury occurred; (3) the domicile, residence, incorporation, and place of business of the parties; AND (4) where the relationship between the parties is centered. The laws of the state having the most significant relationship to the occurrence and the parties will govern the action. If it is not clear which state has a more significant relationship to the case, courts will focus on the policy interests of the different laws (especially its own state policy interests applicable to the case). Most courts will apply local state law and further local policies unless there is a strong reason not to do so. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP Apply the specific choice of law approach depending on the type of issue/case (contract, tort, real property, etc.). Feb 2009, Essay 5 76 05 CONFLICT OF LAWS • Under the governmental interest analysis approach, the court weighs the interests of the states involved, and then applies the facts to the law to determine which state has a greater interest in having its law applied. ■■ Choice of Law Rules: • HIGH 3 of 49 Exams • Contracts Contractual Choice of Law Provision: o Parties to a contract are free to choose a particular state’s law to be applied for matters of contract construction. o For matters of contract validity, the parties may only choose which state’s law applies if: (1) the state has some connection with the contract; (2) the contract has not been 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 in the matter. No Valid Choice of Law Provision: If a valid choice of law provision is NOT applicable to a contract action, then the choice of law must be analyzed under one of the choice of law theories. o Under the traditional vested rights approach, the law where the contract (a) was formed, OR (b) is to be performed applies. o Under the most significant relationship approach of the Restatement (Second) Conflict of Laws, laws of the state having the most significant relationship to the transaction and parties will govern the action. A court must consider the following factors: (1) the place of contracting; (2) the place of negotiation of the contract; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the domicile, residence, nationality, place of incorporation, and place of business of the parties. The factors are weighed according to their relevance to the particular issue. o Under the interest analysis approach, the court weighs the interests of the states involved, and then applies the facts to the law to determine which state has a greater interest in having its law applied. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP On the exam, apply the appropriate contracts choice of rule, depending on whether or not a contractual choice of law provision governs the contractual dispute. July 2017, Essay 6 July 1998, Essay 3 July 1995, Essay 3 77 05 CONFLICT OF LAWS ■■ Choice of Law Rules: • MED 2 of 49 Exams Generally, a court will enforce a contractual forumselection clause to transfer venue UNLESS special factors are present (i.e. significant/unusual hardships or inequality of bargaining power). Additionally, the Supreme Court has held that a forum-selection clause is an important factor favoring a change of venue, even if the forum-selection clause is unenforceable under the applicable state law. ■■ Choice of Law Rules: • LOW 1 of 49 Exams • LOW 1 of 49 Exams Feb 2012, Essay 7 July 2002, Essay 3 Premarital Agreements In determining the enforceability of a premarital agreement, states apply the law of either: (a) the state where the agreement was executed; OR (b) the state having the most significant relationship to the transaction and the parties. Most states apply the Most Significant Relationship Approach, where the laws of the state having the most significant relationship to the transaction and parties will govern. To determine the state with the most significant relationship, the court will weigh the following factors: (i) where the agreement was signed; (ii) where the parties were married; (iii) where the parties lived while married; (iv) where the parties are currently living; (v) where the parties assets are located; and (vi) where any children were born. ■■ Choice of Law Rules: • Contractual Forum-Selection Clause July 2008, Essay 7 Real Property Cases In cases involving the title to real property or a contract for the sale of real property, the laws of the state where the real property is located will generally govern (known as the situs rule), as states have a strong interest in actions that affect real property located within their state. o Under the Restatement (First) approach, the laws of the state where the real property at issue is located (the situs) will always govern. o Under the Restatement (Second) approach, it is presumed that the state where the property is located has the most significant relationship to the action, and that law will govern the action. o Under the Interest Analysis approach, where the real property at issue is located (the situs) will generally govern, UNLESS another state has a greater interest in having its law applied. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 1998, Essay 3 78 05 CONFLICT OF LAWS • However, if real property is merely incidental to a contract (i.e. real estate brokerage contracts, mortgage agreements), then the conflict of laws rules for contracts must be used to determine the applicable law. ■■ Choice of Law Rules: • MED 2 of 49 Exams • Inheritance of Real & Personal Property Inheritance of Real Property: Under the Restatement (Second) of Conflict of Laws, the law of the state where the real property is located (the situs) governs its disposition under intestacy or under a last will and testament. o In a will, a decedent may designate a particular state’s law to be applied for matters of construction, BUT the validity and effect of a will is always determined by the law of the situs state. Inheritance of Personal Property: The law of the decedent’s domicile state at the time of death governs the disposition of decedent’s personal property. Domicile is determined by a person’s: (1) residence (physical presence in the state); AND (2) subjective intent to make the state their permanent home. July 2012, Essay 9 Feb 1998, Essay 3 C. Law Applied by Federal & State Courts ■■ Law Applied by Federal Courts: Erie Doctrine, Substance vs. Procedure, & Supremacy Clause • HIGH 6 of 49 Exams The Erie doctrine applies when a federal case is brought under diversity of citizenship jurisdiction. Under the Erie doctrine, a federal court sitting in diversity will apply its own federal procedural laws, but must apply state substantive law. o Procedural laws include: civil procedure rules, statute of limitations (except in limited circumstances), burden of proof, and rebuttable presumptions. o Substantive laws include: choice of law rules, statute of frauds, irrebuttable presumptions, damages, statute of limitations that condition a substantive right, and statute of limitations where a borrowing statute was enacted (a statute stating that the shorter of the two time periods applies). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 6 Feb 2012, Essay 7 Feb 2009, Essay 5 July 1999, Essay 3 Feb 1997, Essay 5 July 1995, Essay 3 79 05 CONFLICT OF LAWS • • Since choice of law rules are considered substantive law, a federal court sitting in diversity MUST apply the forum state’s choice of law rules to determine the applicable substantive law in the action. Once the applicable state law is determined, the federal court must apply that law as the state court would; it cannot make its own independent judgment on the construction of a law or statute. When no controlling state case law is available to the federal court for guidance, the court must predict how the state’s highest court would rule on the issue. Federal law will apply for matters governed by the U.S. Constitution, laws passed by Congress, or valid federal law that preempts state law under the Supremacy Clause. ■■ Law Applied by State Courts: • LOW 1 of 49 Exams • Substance vs. Procedure A state court will apply the law of the forum state to procedural issues, which include: civil procedure rules, statute of limitations (except in limited circumstances), burden of proof, and rebuttable presumptions. For substantive issues, the choice of law rules of the forum state determine which state’s substantive law is applied. Substantive issues include: choice of law rules, statute of frauds, irrebuttable presumptions, damages, statute of limitations that condition a substantive right, and statute of limitations where a borrowing statute was enacted (a statute stating that the shorter of the two time periods applies). Feb 1999, Essay 5 D. Recognition & Enforcement of Judgments ■■ Full Faith and Credit: Judgments • LOW 1 of 49 Exams • State, Federal, and Foreign Court State courts are 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). In addition, state courts are required to give a federal judgment the same force and effect as it would be given under the preclusion rules of the state in which the federal court is sitting. Federal courts are required to give a state-court judgment the same preclusive effect as a state court is required to give to another state court judgment. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2004, Essay 6 80 05 CONFLICT OF LAWS • • A judgment is entitled to full faith and credit when: (1) the rendering court had jurisdiction (both personal and subject matter jurisdiction); (2) the case was decided on the merits; AND (3) the judgment was final. o Under the doctrine of comity, courts may, but are not required, to give full faith and credit to judgments from foreign countries. The Supreme Court has held that a judgment is entitled to full faith and credit even as to questions of jurisdiction when those questions were (1) fully and fairly litigated, and (2) finally decided by the court which rendered the original judgment. ■■ Full Faith and Credit: • HIGH 4 of 49 Exams • The validity of a marriage will be determined by the law of the state that has the most significant relationship to the spouses. A marriage that is valid where formed is valid everywhere, UNLESS it (1) violates the strong public policy of another state that (2) has the most significant relationship to the spouses and the marriage. Most states will honor a valid common law marriage established in another state (even if not recognized within the state). Once established, a common law marriage is equivalent to a ceremonial marriage. However, a court may refuse to honor a common law marriage when the spouses and the marriage have limited contacts with the state where the common law marriage was allegedly established. ■■ Full Faith and Credit: • HIGH 6 of 49 Exams • Ceremonial & Common Law Marriage Family Law Judgments A divorce (whether ex parte or bilateral) validly granted in another state is entitled to full faith and credit in all other states. An ex parte divorce (a divorce action where only one of the spouses is before the court) may be maintained without personal jurisdiction over the absentee spouse when the plaintiff-spouse is a domiciliary of the rendering state. The plaintiff-spouse’s status as a domiciliary gives the court subject matter jurisdiction over the marriage itself (the marital res). In a matrimonial action involving economic or child custody/support issues (alimony, property distribution, child support and custody) the court MUST have personal jurisdiction over the defendant-spouse for the judgment to be entitled to full faith and credit in other states. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 3 July 2011, Essay 6 July 2006, Essay 4 July 1995, Essay 5 MEE TIP On the exam, apply the appropriate family law full faith and credit rule depending on what type of judgment/order is at issue (i.e. divorce, alimony, child support, child custody). July 2009, Essay 3 Feb 2005, Essay 4 Feb 2003, Essay 3 July 2001, Essay 5 Feb 2000, Essay 5 Feb 1996, Essay 3 81 05 CONFLICT OF LAWS o o Under the Parental Kidnapping Prevention Act (PKPA), state courts MUST give full faith and credit to child custody decrees of other state courts when: (1) the issuing court had jurisdiction under the laws of the State; AND (2) the assertion of jurisdiction by that court was consistent with the jurisdictional requirements of the PKPA. Most states have adopted either the UCCJA or UCCJEA, which has substantially similar requirements as the PKPA. Under the Uniform Interstate Family Support Act (UIFSA), state courts MUST give full faith and credit and enforce child support awards of other state courts when the issuing tribunal had jurisdiction. The UIFSA has been adopted by every state, and provides for registration of child support orders. Once registered, other states must recognize and enforce the order and cannot modify it. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 82 06 CONSTITUTIONAL LAW A. Constitutional Limits on Federal Court Jurisdiction ■■ State Sovereign Immunity (11th Amendment) • HIGH 2 of 24 Exams • • The Eleventh Amendment prohibits a party from suing a state or a state agency in federal court UNLESS: (a) the state explicitly consents to waive its Eleventh Amendment protections; (b) the suit pertains to federal laws adopted under Section 5 of the Fourteenth Amendment; (c) the suit seeks only injunctive relief against a state official for conduct that violates the Constitution or federal law; OR (d) the suit seeks money damages from a state official. The Eleventh Amendment DOES NOT apply to: (a) local governments (counties, cities, towns); (b) federal suits brought by one state against another state; and (c) a suit by the federal government against a state. The Supreme Court has held that Congress CANNOT abrogate state sovereign immunity EXCEPT for federal laws adopted under Section 5 of the Fourteenth Amendment. To determine whether Congress validly abrogated State immunity, two issues must be resolved: (1) whether Congress unequivocally expressed its intent to abrogate the immunity; AND (2) if it did, whether Congress acted pursuant to a valid grant of constitutional authority. MEE TIP On the exam, the terms “Constitution,” “constitutional,” and “unconstitutional” refer to the federal U.S. Constitution (unless otherwise indicated). July 2017, Essay 2 July 2012, Essay 3 B. Justiciability ■■ Standing • MED 0 of 24 Exams • • Article III of the Constitution limits federal courts to deciding actual cases or controversies. As such, a plaintiff MUST have standing to sue in federal court. Standing exists when the plaintiff: (1) personally suffered an injury in fact (the plaintiff has been injured or injury is imminent); (2) the injury was caused by the defendant (a reasonable connection is sufficient); AND (3) the injury is redressable by a court order. The Supreme Court has recognized an injury in fact where the plaintiff’s constitutional or statutory rights have been violated. Standing & Injunctive Relief: When a plaintiff is seeking injunctive or declaratory relief, he must show that there is a concrete, imminent threat of future injury that is neither conjectural nor speculative. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams MEE TIP Apply any specific standing rules concerning injunction relief or organizational/third-party/ taxpayer standing, depending on the fact pattern of the essay question – i.e. whether plaintiff is an organization, third-party, taxpayer, or is seeking injunctive relief. 83 06 CONSTITUTIONAL LAW • • Organizational & Third-Party Standing: o Generally, third-party standing is NOT permitted. However, an exception is made when: (a) there is a close relationship between the plaintiff and the third-party (i.e. doctor/patient); (b) it would be difficult or unlikely for the third-party to assert their rights on their own; OR (c) the third-party is an organization. o An organization has standing to sue on behalf of its members if: (a) the suit is related to an issue that is germane to the organization’s purpose; (b) the organization’s members would have standing to sue (injury in fact to the members); AND (c) the members’ participation is not necessary. Taxpayer Standing: A plaintiff may always bring a suit regarding the specific amounts owed under their tax bill. BUT, a plaintiff DOES NOT have standing to sue solely based on being a taxpayer, except in the following instance: When the taxpayer is challenging government expenditures in violation of the Establishment Clause of the Constitution. ■■ Advisory Opinions, Ripeness, & Mootness • MED 0 of 24 Exams • • Article III of the Constitution limits federal courts to deciding actual cases or controversies. As such, a court CANNOT give advisory opinions or address hypothetical disputes. Ripeness refers to whether the case is ready to be litigated. A case is ripe for review by a court when there is actual harm or an immediate threat of harm to the plaintiff. o A court may grant pre-enforcement review of a statute or law after considering: (1) the hardship of the parties if the court withholds review; AND (2) the fitness of the record for review. Mootness refers to instances when the dispute has ended or was resolved before review. However, a court may hear a case that has ended or was resolved when: (a) the wrong alleged is capable of being repeated and escaping review; (b) the defendant voluntarily stops an offending practice, but can resume it at any time; OR (c) in a class action, where at least one member of the class has an ongoing injury. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP If the essay involves a case not being ready for review (i.e. no injury or immediate threat of injury), then apply the Ripeness rule. If the fact pattern involves a case where the dispute has ended or resolved, then apply the Mootness rule. 0 exams 84 06 CONSTITUTIONAL LAW C. Powers of Congress ■■ Commerce Clause • MED 1 of 24 Exams • The Commerce Clause of the Constitution grants Congress the authority to regulate commerce between the States (interstate commerce), foreign nations, and Indian tribes. Congress may regulate: (1) the channels of interstate commerce (i.e. highways and phone lines); (2) the people and instrumentalities that work and travel in interstate commerce (i.e. cars, airplanes, airplane pilots, flight attendants); AND (3) economic or commercial activities that have a substantial effect on interstate commerce. Federal regulations regarding intrastate activities will be upheld if (1) there is a rational basis, (2) to conclude that the cumulative national impact of the activities (aggregation), (3) have a substantial effect on interstate commerce. o However, aggregation CANNOT be used when the activities regulated are NOT commercial or economic in nature, thus making the substantial effect standard difficult to meet. The Supreme Court has held that the following activities DO NOT have a substantial economic effect: possessing a firearm in a school zone; and general acts of violence. July 2012, Essay 3 ■■ Power to Enforce the 13th, 14th, and 15th Amendments • MED 1 of 24 Exams • Congress has the power to enforce the provisions of the following Amendments through appropriate legislation: 13th Amendment (abolition of slavery); 14th Amendment (privileges and immunities, due process, equal protection, apportionment of representatives); and 15th Amendment (right to vote cannot be denied because of race). Legislation which deters/remedies a constitutional violation under these Amendments is within Congress’s enforcement power even if in the process it prohibits conduct which is not unconstitutional. However, Congress may only prohibit behavior that is likely to involve a constitutional violation. Congress CANNOT define constitutional rights or change substantive law. There must be congruence and proportionality between the constitutional injury to be prevented or remedied, and the legislative means that are adopted by Congress. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2015, Essay 2 85 06 CONSTITUTIONAL LAW ■■ Taxing Power • MED 0 of 24 Exams • Congress has the power to lay and collect taxes, duties, imposts and excises. All duties, imposts, and excises MUST be geographically uniform throughout the United States. Under the 16th Amendment, Congress has the power to collect taxes on income that are derived from any source. Congress may also prescribe what shall be taxed and the application of a uniform percentage when computing the tax. 0 exams ■■ Spending Power • MED 1 of 24 Exams • Congress has the power to spend for the common defense and general welfare of the United States. This power is interpreted broadly and allows Congress to attach conditions on States receiving federal funds upon compliance with federal statutory and administrative directives (essentially allowing Congress to regulate areas even when it wouldn’t otherwise have the power to do so). However, the spending power is NOT unlimited. Congress must satisfy five restrictions when placing conditions on States receiving federal funds: (1) the spending must be for the general welfare – but courts should defer substantially to the judgment of Congress; (2) the condition must be imposed unambiguously, enabling the States to exercise their choice knowingly; (3) the condition must be related to the federal interest in particular national projects or programs; (4) the condition cannot induce activities that would be unconstitutional for the States to engage in themselves; AND (5) the condition cannot be so coercive as to turn pressure into compulsion – compulsion is when States have no real option but to acquiesce (i.e. where threatened funding was over 10% of State budgets). July 2018, Essay 1 D. Powers of the President ■■ Executive Powers: • MED 0 of 24 Exams Domestic Powers The President has the power to: (1) faithfully execute the law (under the “take care” clause) as Chief Executive of the United States; (2) appoint ambassadors, public ministers, consuls, Supreme Court judges, federal court judges, and other officers of the United States (with Senate advice and consent); (3) appoint inferior officers when such power is given to the President by Congress (note: while Congress itself cannot exercise the power to make appointments, they © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 86 06 CONSTITUTIONAL LAW may vest this power in other branches); (4) remove cabinet level appointees (without cause) and independent regulatory agency appointees (without cause unless Congress passes a law requiring good cause); (5) pardon federal crimes (except for crimes that lead to impeachment by the House of Representatives); AND (6) act as Commander in Chief of the military (the power to control troops). ■■ Executive Powers: • MED 0 of 24 Exams • Treaty and Foreign Affairs Powers The President shares treaty powers with Congress. Treaties may be negotiated by the President, but must be ratified by a two-thirds vote of the Senate. However, the President may enter into Executive Agreements (agreements between the President and a head of a foreign country) without Senate approval. The President has broad power to control and deploy U.S. troops in foreign countries. 0 exams E. Federal Interbranch Relationships ■■ Delegation of Congressional Powers & Non-Delegation Doctrine • MED 0 of 24 Exams • Congress has broad authority to delegate legislative powers so long as: (1) the powers are delegable under the Constitution (Congress cannot delegate the power to impeach or declare war); AND (2) Congress provides reasonably intelligible standards to guide the delegation. Congress can delegate its powers to the Executive or Judicial branches of the federal government. Under the Non-Delegation Doctrine, Congress CANNOT delegate powers it does not have (i.e. executive or judicial powers) to itself or its officers. 0 exams F. Intergovernmental Immunities ■■ State Immunity from Federal Law (10th Amendment) • HIGH 2 of 24 Exams • Under the 10th Amendment, all powers NOT granted to the Federal government are reserved to the States (unless such powers are expressly prohibited by the Constitution). Congress CANNOT compel state governments to implement legislation, BUT Congress may induce state government action by attaching restrictions and conditions on federal funding grants pursuant to its federal taxing and spending powers (Congress has the broad power to tax and spend for the general welfare). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2018, Essay 1 July 2012, Essay 3 87 06 CONSTITUTIONAL LAW • The Supreme Court has held that the Federal Government may regulate state activities on the same terms as private actors so long as it does not seek to control or influence (commandeering) the manner in which States regulate private parties. A federal regulation CANNOT require the States in their sovereign capacity to regulate their own citizens, require the state legislature to enact any laws or regulations, or require state officials to assist in the enforcement of federal statutes regulating private individuals. A federal mandate requiring state personnel to alter their own activities is not an unconstitutional commandeering. G. Federalism-Based Limits on State Authority ■■ Negative Commerce Clause • HIGH 2 of 24 Exams • A state or local government may regulate intrastate commerce, as long as Congress has not enacted laws on the subject matter. If Congress has enacted laws on a particular matter, any state or local laws would be pre-empted by federal law. Notwithstanding the above, state and local governments generally CANNOT pass laws that: (a) discriminate against out-of-state commerce; OR (b) place an undue burden on interstate commerce. o Discriminatory Regulations: A law is deemed discriminatory when it is either (a) facially discriminatory, OR (b) the law has a discriminatory impact because it favors in-state commerce over out-of-state commerce. State and local laws that discriminate against out-of-state commerce are UNCONSTITUTIONAL, UNLESS: (a) the burden on interstate commerce is narrowly tailored to achieve a legitimate, non-protectionist state objective (there are no less-discriminatory alternatives available); OR (b) the state or local government is a “market participant” rather than a regulator of economic activity (a state may favor its own citizens regarding state programs, state businesses, or when it is the entity buying or selling goods). The Supreme Court has held that states CANNOT use discriminatory means to accomplish even a legitimate environmental purpose (i.e. prohibiting the disposal of out-of-state waste in-state). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 2 Feb 2016, Essay 4 88 06 CONSTITUTIONAL LAW o Unduly Burdensome Regulations: State and local laws that are not discriminatory, but still 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 government. ■■ Supremacy Clause & Preemption • MED 0 of 24 Exams • Under the Supremacy Clause of the U.S. Constitution, validly enacted federal law will always trump (preempt) conflicting state law. State law may be preempted either expressly or impliedly. Express preemption occurs when federal legislation specifically states that the federal law is exclusive. Implied preemption occurs through: (a) direct conflict with state law; (b) field preemption (when it appears from the law itself or its legislative history that the federal government intended to exclusively occupy a given field); OR (c) when the state law substantially interferes with the objective of the federal law. 0 exams H. Governmental Action ■■ Governmental Action (“State Action”) • HIGH 2 of 24 Exams • When alleging a constitutional violation, a plaintiff MUST show that the violation is attributable to government action (also known as “state action”), which applies to ALL levels of local, state, and federal government. Generally, the conduct of private individuals or entities DO NOT constitute state action and is NOT protected by the U.S. Constitution. The Supreme Court has held that running a private school or college is not “state action,” even when said school is funded primarily by government funds. Courts will find “state action” for private conduct when the conduct involves either: (a) a traditional public function – powers traditionally and exclusively reserved to the government; OR (b) when significant government involvement exists to authorize, encourage, or facilitate private conduct that is unconstitutional (i.e. government enforcement of certain private contracts, entanglement or joint action between a state and private actor, and encouragement of private discrimination). Examples of a traditional “public function” include holding elections and where a corporation operates a privately owned “company town” that provides typical services of the government. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2013, Essay 3 July 2011, Essay 8 89 06 CONSTITUTIONAL LAW I. Due Process (5th & 14th Amendments) ■■ Substantive Due Process • MED 0 of 24 Exams • • Substantive Due Process pertains to the government’s power to regulate certain activities under the Due Process Clause of the 14th Amendment (applicable to the states) and the 5th Amendment (applicable to the federal government). Fundamental Rights Test: When the government attempts to regulate fundamental rights, it must satisfy strict scrutiny (the government must show that the law is necessary to serve a compelling government interest). o Fundamental rights include: (1) the right to vote; (2) the right to interstate travel; and (3) the right to privacy, which encompasses the right to marry, procreate, use contraceptives, raise one’s children, keep the family together, and maintain custody over one’s children (but a State can create a rebuttable presumption that a married woman’s husband is the father of a child born during wedlock). Non-Fundamental Rights Test: The government may regulate activities that DO NOT constitute fundamental rights so long as it meets the rational basis test (plaintiff must show that the law is not rationally related to a legitimate government interest). MEE TIP State the general rule concerning the government’s power to regulate certain activities for a Substantive Due Process question, and then apply either the Fundamental Rights Test or Non-Fundamental Rights Test depending on the activity regulated. 0 exams ■■ Procedural Due Process • MED 0 of 24 Exams • The Due Process Clause of the 14th Amendment (applicable to the States) and the 5th Amendment (applicable to the federal government) guarantees that no person shall be denied life, liberty, or property without due process of law. Thus, certain procedures are required when the government deprives an individual of such rights. o Deprivation of liberty occurs when the government deprives an individual of a freedom provided by the Constitution or statute. o Deprivation of property occurs when an individual has an entitlement that is not fulfilled (i.e. welfare or social security benefits). In analyzing a procedural due process claim, the court first determines whether a person’s life, liberty, or property has been taken from her. Then, the court determines what process, if any, was due before or after depriving such rights. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 90 06 CONSTITUTIONAL LAW o To determine what procedures are required, the court will balance the three Matthews v. Eldridge factors: (1) the importance of the private interests being affected; (2) the risk of error under current procedures and the value of additional procedures; AND (3) the importance of state interests and the burdens on the government that would arise from the additional safeguards. Normally, procedural due process requires notice and an unbiased hearing. J. Equal Protection (5th & 14th Amendments) ■■ Equal Protection Analysis • HIGH 2 of 24 Exams • • The Equal Protection Clause of the 14th Amendment (applicable to the States) and the 5th Amendment (applicable to the federal government) prohibits the government from denying citizens equal protection of the laws. To determine if a discriminatory classification against a group of people exists, one of the following must be shown: (a) the law is discriminatory on its face; (b) the law is facially neutral, but is applied in a discriminatory manner; OR (c) a discriminatory motive, when the law is facially neutral but creates a disparate impact. When the government makes laws that classify people into groups, the constitutionality of the law will be considered using one of three different levels of scrutiny: (a) Rational Basis; (b) Intermediate Scrutiny; OR (c) Strict Scrutiny. o Strict Scrutiny: The court will apply strict scrutiny when: (a) a classification is based on a suspect class (race, national origin, or alienage in some instances); OR (b) when the law infringes on a fundamental right for a class of people (i.e. right to vote, exercise of religion, have access to the courts, and interstate travel). Alienage (legal non-citizen status) is generally a suspect class only when a State is involved (as Congress has power over aliens under the Constitution). A State may limit a non-citizen’s participation in a function of the government, which is subject to rational basis review.  Under strict scrutiny, the government must show that the classification is necessary to serve a compelling government interest. o Intermediate Scrutiny: When a classification is based on a quasi-suspect class (gender, non-marital children), the court will apply intermediate scrutiny. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2015, Essay 2 July 2011, Essay 8 MEE TIP On the exam, determine the applicable level of scrutiny depending on the classification, and then state and apply the applicable rule (strict scrutiny, intermediate scrutiny, or rational basis). 91 06 CONSTITUTIONAL LAW Under intermediate scrutiny, the government must show that the classification is substantially related to an important government interest (the interest MUST be the government’s actual interest in passing the law).  The Supreme Court has held that a State may treat men and women differently and provide separate facilities (bathroom facilities, separate sports teams), BUT the State must demonstrate: (1) an exceedingly persuasive justification for separate treatment; AND (2) that the facilities are substantially equivalent. In addition, a State can use a compensatory purpose to justify an otherwise discriminatory classification but only if members of the gender benefited by the classification actually suffer a disadvantage related to it. Rational Basis: For all other classes (age, disability, wealth, undocumented aliens), the court will apply the rational basis test.  Under rational basis, the plaintiff must show that the classification is NOT rationally related to any legitimate government interest (any conceivable interest is sufficient, even if it is not the government’s actual interest in passing the law).  o K. Takings (5th Amendment) ■■ Takings (5th Amendment) • MED 1 of 24 Exams • • Under the Takings Clause of the 5th Amendment, the government may take private property for public use if it provides just compensation. o A taking is deemed for public use as long as there is a reasonable belief that it will benefit the public. o Just compensation is measured by the fair market value of the property to the owner AT THE TIME OF the taking (relocation/moving costs are not included). Two types of takings exist: Possessory (per se) takings occur when the government physically takes or occupies the property, even if it’s just a small portion of the property. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2014, Essay 1 92 06 CONSTITUTIONAL LAW • • Regulatory takings occur when the regulation (i.e. zoning ordinance) leaves no economically viable use of the property. Courts will determine whether a regulatory taking occurred by balancing private and community interests under the three Penn Central factors: (1) the economic impact of the regulation on the claimant; (2) the extent of interference with distinct investment-backed expectations (the owner’s primary expectation of use for the property); AND (3) the character of the governmental action. o The Supreme Court in Penn Central recognized that the government may execute laws and programs that adversely affect recognized economic values in a wide variety of contexts. The Court has upheld landuse regulations (i.e. zoning laws) that destroyed or adversely affected recognized real property interests in instances where the government reasonably concluded that the health, safety, morals, or general welfare would be promoted by prohibiting particular contemplated uses of land. Takings & Conditions on Approval of Permits: Conditions placed on the approval of permits DO NOT constitute an uncompensated taking under the 5th Amendment if: (1) there is an essential nexus between the state interest and the permit condition; AND (2) the government makes an individualized determination that the condition is roughly proportional (in nature and extent) to advancing that state interest. o The Supreme Court has found the required nexus between a conditioned easement (bike path) and a city’s attempt to reduce traffic congestion by providing for alternative means for transportation. L. Other Protections ■■ Privileges and Immunities Clause • MED 0 of 24 Exams • • Under the Privileges and Immunities Clause of the 14th Amendment, States may not intentionally discriminate against non-residents concerning: (a) civil liberties (right to vote, right to travel interstate); OR (b) important economic activities (ability to earn a livelihood). HOWEVER, laws that discriminate against non-residents will be upheld if the State is justified for the discrimination – when: (1) there is a substantial reason for the difference in treatment; AND (2) the discriminatory law has a substantial relationship to that reason. The Privileges and Immunities Clause DOES NOT protect aliens or corporations from discrimination. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 93 06 CONSTITUTIONAL LAW M. Freedom of Religion ■■ Freedom of Religion: • MED 0 of 24 Exams • • The Establishment Clause in the 1st Amendment is applicable to the federal government, as well as States and local governments (through incorporation in the 14th Amendment). The Establishment Clause prohibits the government from establishing a religion or endorsing/ supporting religion. Laws that discriminate against a religion MUST satisfy strict scrutiny (the government must show that the law is narrowly tailored to achieve a compelling government interest, and that the least restrictive means was used). Under the Lemon test, a law that has some relationship to religion but that DOES NOT discriminate against religion will be upheld if: (1) it has a secular purpose; (2) its primary effect does not advance or inhibit religion (incidental effects are allowed); AND (3) it does not excessively entangle the government with religion. ■■ Freedom of Religion: • MED 0 of 24 Exams • • Establishment Clause 0 exams Free Exercise Clause The Free Exercise Clause in the 1st Amendment is applicable to the federal government, as well as States and local governments (through incorporation in the 14th Amendment). The Free Exercise Clause prohibits the government from interfering with the exercise of religion. Laws designed to interfere with religion must meet strict scrutiny (the government must show that the law is narrowly tailored to achieve a compelling government interest, and that the least restrictive means was used). Religious beliefs are protected if they are genuine, sincere, and hold a place in one’s life similar to a traditional religion. HOWEVER, laws of general applicability that cause unintentional burdens on religion ARE CONSTITUTIONAL and do not offend the Free Exercise Clause (i.e. prohibiting illegal drug use or human/animal sacrifice). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 94 06 CONSTITUTIONAL LAW N. Freedom of Speech MEE TIP Checklist of When to Use Each Freedom of Speech Rule To best prepare you for an essay question we have put together a checklist of when to apply certain Free Speech rules on the MEE. Note, we wanted each rule to be complete and free standing when applying the same to an essay question, so you may see some repetitive statements in each rule as many of the freedom of speech concepts are interrelated. Issue # 1: Is the class of speech unprotected or subject to limited protection? o See the following rules:  Unprotected Speech: Obscenity  Unprotected Speech: Incitement of Imminent Lawless Action  Unprotected Speech: Fighting Words  Freedom of Speech: Regulation of Commercial Speech Issue # 2: Is the government regulating speech generally or regulating speech in a public space? oo See the following rules: Freedom of Speech: Content-Based vs. Content-Neutral Restrictions Freedom of Speech: Regulation of Expressive Conduct Freedom of Speech: Vague & Overbroad Laws Freedom of Speech: Public Forum, Limited Public Forum, & Non-Public Forum oo When to use each rule: If the regulation DOES NOT involve restricting speech in a public space (public forum, limited public forum, nonpublic forum), then apply the general rule of “Freedom of Speech: Content-Based vs. Content-Neutral Restrictions”. If the regulation DOES involve restricting speech in a public space, then apply the “Freedom of Speech: Public Forum, Limited Public Forum, & Non-Public Forum” rule. If the regulation regulates expressive conduct, then apply the “Freedom of Speech: Regulation of Expressive Conduct” rule. If a law restricts protected speech, apply the “Freedom of Speech: Vague & Overbroad Laws” rule. Issue # 3: Is a regulation/law stopping speech before it occurs (a prior restraint)? oo See the following rules: Freedom of Speech: Prior Restraint Issue # 4: Does the fact pattern involve public school students or government employees? oo See the following rules: Freedom of Speech: Public School Students Freedom of Speech: Government Employees © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 95 06 CONSTITUTIONAL LAW ■■ Freedom of Speech: Restrictions • MED 0 of 24 Exams • • The 1st Amendment protects the right to freedom of speech and expressive activities that constitute speech, and is applicable to the federal government and state/ local governments (by incorporation through the 14th Amendment). The right to anonymous speech and the right not to speak is included within the 1st Amendment protections. However, conduct that has no communicative value DOES NOT fall within the protection of the 1st Amendment, and thus can be regulated. Content-Based Restrictions: Government regulations regarding the content of protected speech (subject matter or viewpoint) must satisfy strict scrutiny. o Under strict scrutiny, the government must show: (1) that the regulation is narrowly tailored to achieve a compelling government interest; AND (2) it used the least restrictive means to accomplish its purpose. Content-Neutral Restrictions: Generally, the government MAY regulate the time, place, and manner of content-neutral speech if the regulation satisfies intermediate scrutiny. o Under intermediate scrutiny, the government must show that the regulation: (1) is narrowly tailored to achieve a significant government interest; AND (2) leaves open alternative channels of communication. The regulation DOES NOT need to be the least restrictive means. ■■ Freedom of Speech: Non-Public Forum • HIGH 2 of 24 Exams • • Content-Based vs. Content-Neutral 0 exams Public Forum, Limited Public Forum, & The 1st Amendment protects the right to freedom of speech and expressive activities that constitute speech, and is applicable to both state/local governments (by incorporation through the 14th Amendment) and the federal government. However, conduct that has no communicative value (i.e. trespass) DOES NOT fall within the protection of the 1st Amendment, and thus can be regulated by the government. The conduct of speech and assembly in public spaces CAN be regulated by the government in certain instances depending on the type of forum. A public forum is one that has traditionally been available to the public for free speech (i.e. public sidewalks, parks, and streets). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP Depending on the essay question, apply the rule(s) for the type of forum at issue. Feb 2013, Essay 3 July 2010, Essay 4 96 06 CONSTITUTIONAL LAW Content-Based Restrictions: The government CANNOT regulate speech in public forums based on content UNLESS it satisfies strict scrutiny.  Under strict scrutiny, the government must show: (1) that the regulation is narrowly tailored to achieve a compelling government interest; AND (2) it used the least restrictive means to accomplish its purpose. o Content-Neutral Restrictions: However, the government MAY regulate the time, place, and manner of content-neutral speech in public forums if the regulation satisfies intermediate scrutiny.  Under intermediate scrutiny, the government must show the regulation: (1) is narrowly tailored to achieve a significant government interest; AND (2) leaves open alternative channels of communication. The regulation DOES NOT need to be the least restrictive means. o The Supreme Court has held that a government interest in keeping streets clean and of good appearance is insufficient when striking down an anti-leafletting ordinance that restricted speech. Thus, anti-littering laws that suppress speech are likely unconstitutional. A limited public forum (a/k/a designated public forum) is one that has not traditionally been available to the public for free speech, but that the government chooses to make available (i.e. where a school makes classrooms available for club meetings). Limited public forums are treated the same as public forums. Non-public forums are other public places that have traditionally been limited for free speech (i.e. schools, military bases, and airports). The government may regulate speech in non-public forums if the regulation is: (1) reasonable; AND (2) viewpoint neutral. Private property: Generally, a person DOES NOT have the right to access another’s private property (i.e. a shopping center) to deliver the speech or expressive conduct. Religious Speech & Public Forums: o If a school opens itself as a limited public forum, then it CANNOT deny access based upon the religious content of speech (i.e. a religious club). The Supreme Court has held that in a public forum, religious speech is treated equal to non-religious speech, and content-neutral access rules do not violate the Establishment Clause. o • • • • © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP Apply the Religious Speech & Public Forums rule if the fact pattern concerns limiting religious speech in a public forum. 97 06 CONSTITUTIONAL LAW • Licensing Requirements: o Licensing requirements are permitted if: (1) the government has an important reason for licensing; (2) specific, articulated standards are used to grant the licenses to remove discretion of the licensing body; AND (3) procedural safeguards are in place, including assuring a prompt final judicial decision when a license is denied. ■■ Unprotected Speech: • MED 1 of 24 Exams • • MED 1 of 24 Exams • Apply the Licensing Requirements rule if the essay concerns licensing requirements (or similar restrictions) that limit free speech in public spaces. Fighting Words The freedom of speech is protected by the 1st Amendment of the U.S. Constitution. However, certain categories of speech are afforded NO protection under the Constitution. The 1st Amendment DOES NOT protect fighting words or true threats. Fighting words are words, which by their very utterance: (a) inflict injury; OR (b) tend to incite an immediate breach of the peace. Thus, such words must be likely to cause a violent reaction from others. A defendant CANNOT be convicted under a law that is deemed overbroad or vague (where the law applies to constitutionally protected speech), even if the speech falls within an unprotected category. Laws that punish merely offensive, rude, annoying, or abusive speech have been deemed UNCONSTITUTIONAL as overbroad or vague because such laws reach protected speech. Commentary on matters of public concern are afforded greater 1st Amendment protection, and even extend to vehement, caustic, and unpleasant sharp attacks on government and public officials. ■■ Unprotected Speech: MEE TIP July 2009, Essay 2 Incitement of Imminent Lawless Action The freedom of speech is protected by the 1st Amendment of the U.S. Constitution. However, certain categories of speech are afforded NO protection under the Constitution. Speech which incites imminent lawless action is one type of unprotected speech. Such speech may be outlawed if the speech: (1) advocates the use of force or illegality; (2) directed to inciting or producing imminent lawless action (intent); AND (3) likely to incite or produce such action (there is a clear and present danger that the person listening will act on the speech). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2009, Essay 2 98 06 CONSTITUTIONAL LAW • A defendant CANNOT be convicted under a law that is deemed overbroad or vague (where the law applies to constitutionally protected speech), even if the speech falls within an unprotected category. Where a court has previously deemed a law applicable to only unprotected speech (i.e. imminent lawless action), then overbreadth/vagueness will not bar a conviction. ■■ Unprotected Speech: • MED 0 of 24 Exams • • The freedom of speech is protected by the 1st Amendment of the U.S. Constitution. However, certain categories of speech are afforded NO protection under the Constitution. Obscenity is NOT protected under the 1st Amendment, and therefore may be regulated. Material is obscene when: (1) it appeals to the prurient interest (i.e. sexual interest) of an average person applying today’s community standards; (2) it is patently offensive under the law prohibiting obscenity; AND (3) it lacks any serious artistic, literary, or scientific value based on a national standard. The mere private possession of obscene material (except for child pornography) by an adult inside the home CANNOT be made criminal. ■■ Freedom of Speech: • MED 0 of 24 Exams • • MED 1 of 24 Exams 0 exams Regulation of Commercial Speech The freedom of speech is protected by the 1st Amendment of the U.S. Constitution, as applied to the States through the 14th Amendment. However, commercial speech (i.e. advertisements) is given fewer protections under the 1st Amendment. The government MAY regulate truthful, non-misleading commercial speech if the regulation: (1) directly advances; (2) a substantial government interest; AND (3) it is no more extensive than necessary (reasonably tailored) to serve that interest. False or misleading commercial speech is NOT protected. The government may also prohibit professionals from advertising or practicing under a trade name. ■■ Freedom of Speech: • Obscenity 0 exams Public School Students The Supreme Court has held that public school students DO NOT lose their 1st Amendment rights to freedom of speech when they step onto school property, BUT schools are given a greater latitude to regulate speech by a student or teacher. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2013, Essay 3 99 06 CONSTITUTIONAL LAW • • In order to justify the suppression of speech, school officials MUST prove that the conduct in question would materially and substantially interfere with the operation of the school. However, in certain instances the Supreme Court has held the above test is not applicable. For instance, a student’s right to free speech DOES NOT extend to pro-drug messages. Schools CANNOT force students to participate in a flag salute when it offends religious/political beliefs, and any punishment for failing to participate violates the 1st and 14th Amendments. ■■ Freedom of Speech: • MED 0 of 24 Exams • • Government Employees For a government employee’s speech to be constitutionally protected under the 1st Amendment, an employee must have spoken: (1) as a citizen; AND (2) on a matter of public concern. An employee’s statements made pursuant to their official duties are NOT protected. The Supreme Court has set forth a two-step inquiry to determine whether the speech of a government employee is constitutionally protected under the 1st Amendment: o Step 1: Did the employee speak as a citizen on a matter of public concern? If the answer is no, the employee has no 1st Amendment claim based on her employer’s reaction to the speech. If the answer is yes, then the possibility of a 1st Amendment claim arises. o Step 2: If the possibility of a 1st Amendment claim arises, then the question becomes whether the relevant government entity had an adequate justification for treating the employee differently from any other member of the general public based on the government’s interests as an employer. As to the “citizen” requirement, the Supreme Court has held that when public employees make statements pursuant to their official duties, the employees are not speaking as citizens for 1st Amendment purposes, and the Constitution does not insulate their communications from employer discipline. To fall within the realm of “public concern” an employee’s speech must relate to any matter of political, social, or other concern to the community. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 100 06 CONSTITUTIONAL LAW ■■ Freedom of Speech: • MED 0 of 24 Exams Expressive conduct or symbolic speech (the expression of ideas through actions) may be regulated if: (1) the government has an important purpose; (2) the purpose is independent of the suppression of speech; AND (3) the restriction is no greater than necessary to achieve that purpose. ■■ Freedom of Speech: • MED 0 of 24 Exams • MED 1 of 24 Exams • 0 exams Prior Restraint Prior restraints on speech occur when the government attempts to prohibit speech before it happens through a court order or licensing requirement. Prior restraints are generally disfavored and unconstitutional, except in extremely limited circumstances (i.e. when national security is at stake). Court Orders preventing speech must satisfy strict scrutiny (compelling governmental interest, narrowly tailored, and least restrictive means). Procedural Safeguards for Licensing are permitted if: (1) the government has an important reason for licensing; (2) specific, articulated standards are used to grant the licenses to remove discretion of the licensing body; AND (3) procedural safeguards are in place, including assuring prompt final judicial decision when a license is denied. ■■ Freedom of Speech: • Regulation of Expressive Conduct 0 exams Vague & Overbroad Laws Laws that are unduly vague or overbroad are UNCONSTITUTIONAL because they apply to constitutionally protected speech. A statute is unduly vague if it does not put the public on reasonable notice as to what is prohibited. A statute is overbroad if it regulates more speech than is constitutionally permitted. A defendant CANNOT be convicted under a law that is deemed overbroad or vague (where the law applies to constitutionally protected speech), even if the speech falls within an unprotected category. However, where a court has previously deemed a law applicable to only unprotected speech (i.e. imminent lawless action, fighting words), then any alleged overbreadth/vagueness will NOT bar a conviction. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2009, Essay 2 Vagueness/ overbreadth was a minor topic tested in the July 2009 MEE (Essay 2) which primarily tested incitement of imminent lawless action (in Point One) and fighting words (in Point Two). 101 06 CONSTITUTIONAL LAW O. Freedom of the Press ■■ Freedom of the Press: • MED 1 of 24 Exams • • 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 plaintiff made by the defendant, (3) publication by the defendant to a third party, AND (4) damages. If the plaintiff is a public official or public figure (a person who injected themselves into a public controversy or having achieved widespread notoriety), then there is a heightened standard to prove defamation. This requires the plaintiff to prove actual malice: that the defendant spoke with either (a) recklessness as to the truth of the statement, or (b) with knowledge of its falsity. Proof of negligence is insufficient. Private citizens are allowed more protection from defamatory statements than individuals in the public eye. If the plaintiff is a private figure speaking about a matter of public concern, the plaintiff must also prove that the speaker was negligent. ■■ Freedom of the Press: Applicable Laws • MED 1 of 24 Exams • Defamation & Actual Malice Standard MEE TIP If an essay question involves 1st Amendment implications concerning defamation, apply the applicable rule depending on the type of person involved (i.e. public or private figure). July 2008, Essay 2 Disclosure of Private Facts & Generally The 1st Amendment (as applied to state/local governments through the 14th Amendment) protects the press from liability when publishing: (1) truthful private facts; (2) on a matter of public concern; (3) where such information is legally obtained; AND (4) there is no knowledge that any information was obtained illegally (if illegally obtained information was published). A photo taken in a public place is likely NOT a private fact. The 1st Amendment DOES NOT protect the press from liability for violating generally applicable laws (not aimed at suppression of free speech), even if such laws indirectly affect the ability to gather and report news on a matter of public concern. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2008, Essay 2 102 06 CONSTITUTIONAL LAW P. Freedom of Association ■■ Freedom of Association • MED 0 of 24 Exams • The Supreme Court has held that the freedom of association is a fundamental right under the 1st Amendment (as applied to state/local governments through the 14th Amendment). Thus, the government may only regulate the right to freely associate in a group (including the group’s expressive activities or compel disclosure of group membership) if it satisfies strict scrutiny: The government must show that the regulation is (1) necessary to achieve a compelling government interest; AND (2) that the least restrictive means was used). The government MAY punish a person’s membership in a group if it proves that: (1) the group is actively engaged in illegal activity or incites imminent lawless action; (2) the person has knowledge of the group’s illegal activities; AND (3) the person has the specific intent of furthering those illegal activities. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 103 07 CONTRACTS UCC = Uniform Commercial Code MEE TIP Normally, the bar examiners do not test all four elements of a contract at the same time, and instead focus the question on a specific element of contract formation (i.e. mutual assent or consideration). In one instance, the examiner’s model answer included the contract elements as a oneliner (see July 2010, Essay 2, Point One). Notwithstanding, you must know and keep in mind the contract formation elements when working through an essay question. Requirements to Form a Valid Contract A valid contract is formed when there is: (1) mutual assent (an offer and acceptance of that offer by the other party); (2) adequate consideration or a substitute; AND (3) no defenses to formation that would invalidate an otherwise valid contract entered into by the parties. MEE TIP Apply Art. 2 of the UCC for all sales of goods contracts, and the common law for all other types of contracts (i.e. service or construction contracts). Applicable Law Article 2 of the Uniform Commercial Code (UCC) governs all contracts for the sale of goods. The Common Law governs all other contracts. A. Formation of Contracts ■■ UCC Article 2 Governs Contracts for the Sale of Goods • HIGH 7 of 24 Exams • Article 2 of the Uniform Commercial Code (UCC) governs all contracts for the sale of goods. Goods are defined as all things that are movable at the time of identification to the contract (other than the money), including crops and the unborn young of animals. Under the UCC, Common Law principles continue to apply, unless the UCC specifically displaces them. A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. July 2018, Essay 2 Feb 2017, Essay 1 July 2015, Essay 3 July 2014, Essay 2 July 2013, Essay 7 Feb 2013, Essay 2 July 2010, Essay 2 MEE TIP State this rule at the beginning of your essay answer for any question concerning a sale of goods contract. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 104 07 CONTRACTS ■■ Applicable Law: • MED 1 of 24 Exams • Article 2 of the Uniform Commercial Code (UCC) governs all contracts for the sale of goods (goods are all things that are movable at the time of identification to the contract, other than the money). The Common Law governs all other contracts (i.e. service or construction contracts). For mixed contracts, the predominant purpose of the contract determines which law governs. If the predominant purpose is the sale of goods, the UCC will apply. In some states, when a contract divides payment between services and goods, the UCC is applied to the goods section and the common law is applied to the services section. ■■ Mutual Assent: • HIGH 4 of 24 Exams • • UCC Article 2 vs. Common Law Feb 2018, Essay 3 Offer & Acceptance Mutual assent to enter into a contract requires: (1) an offer by one party; AND (2) acceptance of that offer by the other party. o An offer is (1) a manifestation of intent to contract by one party, (2) with definite or reasonably certain terms, (3) that is communicated to an identified offeree. o Acceptance is a manifestation of assent to the terms of the offer, which indicates a commitment to be bound. Silence generally DOES NOT manifest acceptance, but performance may be adequate. For bilateral contracts, the start of performance manifests acceptance. For unilateral contracts, the start of performance only makes an offer irrevocable, and the offer is accepted only when performance is complete. Offers can be terminated before acceptance by: (a) rejection or counter-offer by the offeree; (b) lapse of time; (c) revocation by the offeror; OR (d) death/incapacity of either party. Most offers may be revoked at any time before acceptance through unambiguous words or conduct by the offeror to the offeree indicating an unwillingness or inability to contract. A revocation of an offer is effective when received. An offer can also be terminated when communicated indirectly – when (1) the offeror takes definite action inconsistent with an intention to enter into the proposed contract; AND (2) the offeree acquires reliable information to that effect. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2018, Essay 2 Feb 2017, Essay 1 Feb 2011, Essay 6 July 2007, Essay 1 105 07 CONTRACTS • • • However, some offers are irrevocable including: (1) Option contracts (when consideration is given for a promise to keep an offer open); (2) a Merchant’s firm offer; AND (3) Offers that were relied on to the offeree’s detriment. o A Merchant’s Firm Offer is: (1) an offer to buy or sell goods; (2) by a merchant (a person who deals in goods of the kind); (3) in a signed writing; (4) which states that the offer will be held open and is not revocable during the time stated (or if no time is stated for a reasonable time), but not to exceed three months; AND (5) that the assurance to keep the offer open must be separately signed by the offeror if the form is supplied by the offeree (such as initialing the specific paragraph). A merchant’s firm offer is enforceable without consideration. A rejection of an offer is the manifestation of intent to not accept an offer (through words or conduct), which thereby terminates the offer. A rejection is effective upon receipt by the offeror (when it comes into the possession of the person). Unless there is an agreement to the contrary or a renewal of the offer, an offer CANNOT be accepted after it is rejected. A counteroffer (an offer with new terms) constitutes BOTH a rejection that terminates the original offer AND a new offer. A question or request for unspecified changed terms (when no substitute terms are offered) is NOT a counteroffer, and still allows for acceptance of the offer. ■■ Mutual Assent: Mailbox Rule • HIGH 2 of 24 Exams • Timing of Acceptance/Revocation & the Unless the offeror states otherwise, acceptance of an offer is deemed accepted once the acceptance is sent or communicated (i.e. placed in the mail). However, revocation of an offer is deemed effective when received by the offeree. A communication is received when it comes into the possession of that person. An offer CANNOT be accepted after it is revoked (unless there is an agreement to the contrary). However, once a valid contract has been created by acceptance of the offer, revocation is no longer possible. Under the Mailbox Rule, if the offeror mails a letter to the offeree revoking the offer, but the offeree sends a letter to the offeror accepting the offer before receiving the revocation letter, a valid contract has been created. This is because the acceptance was effective before the revocation became effective. This rule DOES NOT apply to option deadlines (when an offer is only open until a certain date or time). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 1 July 2007, Essay 1 106 07 CONTRACTS ■■ Mutual Assent: Battle of the Forms (Mirror Image Rule and UCC Exception) • MED 1 of 24 Exams • The common law mirror image rule holds that an acceptance must exactly mirror the offer. Acceptance with any additional terms or variations constitutes a counter-offer, which revokes the initial offer. Under Article 2 of the UCC (which governs contracts for the sale of goods) the mirror image rule DOES NOT apply. The UCC states that acceptance does not have to mirror the offer and the acceptance may include different or additional terms, without revocation of the offer and thus constituting a valid contract. However, the offeree’s different or additional terms are deemed included in the contract ONLY IF: (1) both parties are merchants; (2) the term is not a material change; (3) the offer does not expressly limit acceptance to the exact terms of the offer; AND (4) no objection was made within a reasonable time. A material change is any change that is likely to cause hardship or surprise to the offeror (i.e. a disclaimer of warranties, an arbitration clause, payment of shipping/handling charges). ■■ Mutual Assent: • MED 0 of 24 Exams July 1998, Essay 4 Implied-in-Fact Contracts Contracts may be created by the conduct of the parties, without spoken or written words. Conduct by both parties will create a contract if: (1) the conduct is intentional; AND (2) each party knows (or has reason to know) that the other party will interpret the conduct as an agreement to enter into a contract. 0 exams ■■ Indefiniteness or Absence of Terms • MED 0 of 24 Exams • In order for a contract to be valid, the agreement of the parties must be certain and explicit so that their full intention may be ascertained to a reasonable degree of certainty. If the terms of the agreement are NOT certain (they cannot be ascertained to a reasonable degree of certainty), the agreement is indefinite and is not enforceable. A contract that is indefinite as to duration is generally invalid and unenforceable. In a contract for the sale of goods, the only essential term to a contract is the quantity term. A valid contract may exist even if there is no agreement on price, because a reasonable price term (determined at the time the goods are delivered) will be supplied under the UCC. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 107 07 CONTRACTS • Note, even if a contract is unenforceable as indefinite, a party may still bring an action for quantum meruit (under a quasicontract theory), and recover the reasonable value of the benefit conferred to the other party. ■■ Consideration: • HIGH 3 of 24 Exams • • Bargained for Exchange & Substitutes Contracts are NOT enforceable without consideration by BOTH parties. Consideration is a bargained for exchange of a promise for a return promise or performance that benefits the promisor or causes detriment to the promisee. For example, the money paid for goods is consideration for the seller, and the goods sold is consideration for the buyer. Generally, past or moral consideration is NOT sufficient to support a contract. An illusory contract is invalid, and occurs where one party has no obligation to perform (thus adequate consideration is not given by both parties). The Restatement (Second) of Contracts recognizes two exceptions when a contract will be enforced even if it lacks consideration: o The Material Benefit Rule, which provides that a promise made in recognition of a benefit previously received by the promisor from the promisee is binding (even without consideration) to the extent necessary to prevent injustice. Examples include a promise to correct a mistake or providing emergency services or necessities. BUT, the material benefit rule DOES NOT apply when: (a) the benefit was conferred as a gift; OR (b) the value of the promise is disproportional to the benefit conferred. o Promissory Estoppel/Detrimental Reliance: Contracts that lack consideration may be enforced to avoid injustice under the doctrine of promissory estoppel. Promissory estoppel applies when: (1) a party reasonably and foreseeably relied to his detriment on the promise of the other party; (2) the promisor should have reasonably expected a change in position in reliance of the promise; AND (3) enforcement of the promise is necessary to avoid injustice. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2014, Essay 2 July 2009, Essay 5 Feb 1995, Essay 7 108 07 CONTRACTS ■■ Consideration: • MED 0 of 24 Exams Settlement/Release of Legal Claims A settlement or release of legal claims is the voluntary relinquishment or surrender of some known right or privilege, and constitutes valid consideration. A settlement is governed by principles of contract law, and is enforceable if the agreement constitutes a valid contract. A valid settlement or release prevents the party that signed the agreement from pursuing specific legal claims as outlined by the terms of the agreement. ■■ Modification of Contracts: • HIGH 4 of 24 Exams • 0 exams Pre-Existing Duty Rule & Exceptions Under Common Law, contract modifications MUST be supported by consideration. When modifying an agreement, past performance or performance of a preexisting duty owed to a party is NOT treated as adequate consideration. However, several exceptions exist: (1) an addition or change in the performance or promise; OR (2) a fair and equitable modification due to unanticipated changed circumstances and the contract is NOT yet fully performed by either party (usually the unanticipated circumstances must be severe or far beyond what was foreseen). Under the UCC, there is NO consideration requirement for contract modifications made in good faith. However, modifications must be in writing if: (a) they fall within the Statute of Frauds; OR (b) the original contract states that modifications must be made in writing. Good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing. Feb 2018, Essay 3 July 2014, Essay 2 Feb 2011, Essay 6 Feb 1995, Essay 7 B. Defenses to Enforceability ■■ Incapacity • MED 0 of 24 Exams A party MUST have capacity in order to enter into a contract. Contracts entered into by a person who DOES NOT have capacity are voidable by the person who lacked capacity. Minors (persons under 18 years old) and those who lack mental capacity (persons who cannot understand the meaning and effect of the contract) generally lack capacity to enter into a contract. However, minors may be bound for contracts for necessities (i.e. food, shelter, clothing). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 109 07 CONTRACTS ■■ Duress • MED • 1 of 24 Exams • Duress takes two forms: physical compulsion and economic duress. Physical Compulsion: If a person physically compels a person to agree to a contract, then the contract is void (the conduct is not effective to create a contract). Examples include physically forcing someone to sign a contract or making someone agree to a contract via gun-point. Economic Duress: A contract is voidable on the ground of economic duress when (1) a person makes an improper threat, (2) that induces a party, (3) who has no reasonable alternative but to enter into the contract. A mere threat to breach a contract, without more, is generally insufficient. A threat, even if improper, does not amount to duress if the victim fails to take advantage of a reasonable alternative. July 2014, Essay 2 ■■ Undue Influence • MED 0 of 24 Exams • Undue influence involves (1) the unfair persuasion of a person, (2) who is either (a) under the domination of the person exercising the influence or (b) justified in assuming that the person will not act in a manner inconsistent with his welfare because of the relationship between them (i.e. parent and child, husband and wife, clergyman and parishioner, physician and patient). If the contract is induced by undue influence by the other contracting party, the contract is voidable by the victim. If the contract is induced by a non-party to the contract, the contract is voidable by the victim UNLESS the other party to the contract (1) gives value or materially relies, (2) in good faith, and (3) without reason to know of the undue influence on the transaction. 0 exams ■■ Mutual Mistake & Unilateral Mistake • MED 0 of 24 Exams A contract is voidable (it may be rescinded or reformed) when there is a mutual mistake. Mutual mistake occurs when: (1) both parties are mistaken as to a basic assumption on which the contract is made; (2) the mistake is material to the contract; AND (3) the person asserting the mistake did not bear the risk of the mistake (by agreement or by a party treating their limited knowledge as sufficient). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 110 07 CONTRACTS • A unilateral mistake is (1) a mistake made by one party, (2) that is unknown to the other party, (3) concerning a basic assumption, (4) that has a material effect. A unilateral mistake is generally NOT a valid defense to formation of a contract. However, if one party knew or had reason to believe that the other party was mistaken OR the mistake would make enforcement of the contract unconscionable, the contract is voidable by the mistaken party. When the mistake involves price or value, the equitable remedy of rescission or reformation will NOT be allowed because price/value is NOT considered material. ■■ Misrepresentation • MED 1 of 24 Exams • • A fraudulent misrepresentation occurs when one party (1) knowingly, (2) makes a false representation, (3) of a fact, AND (4) the other party reasonably relies on the misrepresentation to their detriment. A contract induced by a fraudulent misrepresentation is voidable (may be rescinded) by the injured party. A non-fraudulent misrepresentation occurs when there is (1) a statement of material fact, (2) by a party or agent, (3) that is false (no requirement of wrongdoing), (4) inducing the contract, AND (5) the other party reasonable relies on the misrepresentation to his detriment. A contract induced by a fraudulent misrepresentation is voidable (may be rescinded) by the injured party, UNLESS the misrepresented fact is not material. A misrepresentation is material if it would likely induce a reasonable person to agree. Concealment (an affirmative act intended to keep another from learning of a fact) is equivalent to a misrepresentation (a false statement of fact). Generally, there is no duty to disclose information, UNLESS: (a) a fiduciary relationship exists; (b) it is necessary to correct an earlier mistake; (c) active concealment of a material fact occurs; OR (d) a person is selling real property and knows material facts that affect the value of the property (that the buyer is unaware of and cannot reasonably discover). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2010, Essay 2 111 07 CONTRACTS ■■ Illegality & Public Policy • MED 0 of 24 Exams Courts will NOT enforce contracts that are illegal or contrary to public policy. Such contracts are void if the illegality existed at the time of contract formation. If the contract was legal at the time of contract formation, but has subsequently become illegal, performance will be discharged. A contract with an illegal purpose is voidable by a party who didn’t know of the illegal purpose. 0 exams ■■ Unconscionability • MED 0 of 24 Exams • • Unconscionability occurs when a contract or term shocks the conscience of the court. The determination of unconscionability is made in light of the setting, purpose and effect of the transaction. Relevant factors a court will consider include: weaknesses in the contracting process similar to a lack of capacity, fraud, and other invalidating causes, such as public policy grounds. Inadequacy of consideration alone does not invalidate a contract. Unconscionability usually occurs if the contract/ term is BOTH substantively and procedurally unconscionable. Procedural unconscionability occurs when one party to the contract (usually the party who wrote the contract) has a superior bargaining position over the other party and uses that power to their advantage. An example is engaging in unfair pressure or bargaining practices to force the other party to enter into the contract. Substantive unconscionability occurs when the contract contains terms that are obviously unfair and one-sided in favor of the party with the superior bargaining power. If a contract or term is found unconscionable a court may: (a) refuse to enforce the contract; (b) enforce the contract without the unconscionable term; OR (c) limit the application of any unconscionable term. ■■ Statute of Frauds: • HIGH 3 of 24 Exams 0 exams Contracts Requiring a Signed Writing Contracts Requiring a Signed Writing: Under the Statute of Frauds, the following contracts are not valid UNLESS they are in a writing signed by the party to be charged: (1) Marriage contracts; (2) Suretyships (where a guarantor promises to take on the debt of another if that person fails to pay) unless the main purpose exception applies (the surety’s main purpose in making the promise was to benefit himself); (3) Contracts that Cannot be fully performed in © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2015, Essay 3 July 2013, Essay 7 July 2007, Essay 1 112 07 CONTRACTS • • 1 year from the date the contract is entered into (there must be no possible way the contract can be performed within 1 year); (4) Contracts for the Sale of real property or creating an interest in real property (i.e. easements, leases over one year); (5) Promises to pay an estate’s debt from the personal funds of the Executor/Administrator; AND (6) Contracts for the Sale of goods for $500 or more. Contracts for the Sale of Goods for $500 or More: o Under Article 2 of the UCC, all contracts for the sale of goods for $500 or more MUST be in writing. The writing must state the parties, the quantity and nature of the goods, and be signed by the party to be charged. o However, four exceptions exist: (1) Merchant’s Confirmatory Memorandum – In a sale of goods contract between two merchants (two people carrying on a business or trade), a writing that confirms an agreement is sufficient even if it is signed by only the party enforcing it (not the party whom it is enforced against), as long as the party against whom it is enforced did not promptly object; (2) Goods Accepted or Paid For – A seller may enforce the contract price of any goods accepted or paid for by the buyer, but NOT the whole contract price if only a portion of the total quantity of goods to the contract are accepted; (3) Custom Made Goods – A seller may enforce the contract price for custom made goods, which are goods in which the seller has made a substantial start AND are not suitable for sale in the ordinary course of the seller’s business; (4) Admission During Judicial Proceeding – A sale of goods contract for $500 or more is enforceable without a writing when the party to be charged admits that there was a contract during a judicial proceeding (i.e. in a deposition or courtroom testimony). Satisfying the Writing Requirement: In order to satisfy the Statute of Frauds, a writing MUST: (1) be signed by (or on behalf of) the party to be charged; (2) reasonably identify the subject matter of the contract; (3) indicate that a contract has been made by the parties; AND (4) state the essential terms with reasonable certainty. The writing may be formal or informal, including a written contract, will, notation on a check, receipt, pleading, informal letter, or an electronic communication (i.e. email). The statute of frauds DOES NOT require that an agreement be contained in one signed document; it may consist of several writings if (i) one of © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP When an essay involves a sale of goods contract for $500 of more, apply the specific rule and exceptions for such contracts. 113 07 CONTRACTS the writings is signed and (ii) the writings clearly indicate that they relate to the same transaction. Signed means using any symbol with the intent to adopt or accept a writing, including: a written or typed name; initials; electronic signature; or a symbol found in a billhead or letterhead (when the UCC applies). C. Contract Content & Meaning ■■ Parol Evidence Rule • MED 1 of 24 Exams • • • Under the Parol Evidence Rule, a party CANNOT introduce evidence of a prior or contemporaneous agreement (either oral or written) that contradicts a later writing. However, there are four exceptions where a court will permit such evidence: (1) to correct a clerical error or typo; (2) to establish a defense against formation (that the contract wasn’t valid in the first instance); (3) to interpret vague or ambiguous terms, but courts will interpret words to represent their ordinary or plain meaning (the plain meaning rule); and (4) to supplement a partially integrated writing. The Parol Evidence Rule DOES NOT apply to subsequent agreements. A partially integrated writing DOES NOT contain a complete statement of all the terms the parties agreed to. As such, proof of additional terms is allowed if the terms DO NOT contradict the writing. Under the UCC, ALL writings are presumed to be partial integrations, unless the writing is fully integrated. A fully integrated writing is a complete and exclusive statement of the terms, and discharges prior agreements to the extent that they are within its scope. A merger clause is evidence that the writing is complete on its face (fully integrated) and cannot be supplemented with additional consistent terms. Feb 2018, Essay 3 The July 2010 MEE (Essay 2, Point One) mentioned the UCC rule regarding partial integrations in the “Note” section, but parol evidence was not a tested issue. D. Performance, Breach, & Discharge ■■ Condition Precedent • MED 1 of 24 Exams A condition precedent in a contract makes performance conditional upon the completion of the condition. Usually, a condition precedent is expressly stated in a contract. If a condition fails, no obligation of performance arises, and thus no breach has occurred. However, occurrence of a condition may be excused by the later action or inaction of © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2011, Essay 6 114 07 CONTRACTS the person who is protected by the condition. This occurs in 2 instances: (1) A Protected Party’s Failure to Cooperate or Make a Good Faith Effort – the protected party can lose protection of the condition if he does not make a good faith effort to satisfy the condition (this implied duty of good faith will be satisfied when reasonable steps to satisfy the condition are taken); and (2) Waiver – waiver occurs when a protected party voluntarily gives up the protection of the condition. The protected party can retract waiver for future conditions to the extent that the other party has not relied on the waiver. ■■ Implied Obligation of Good Faith and Fair Dealing • MED 0 of 24 Exams • Every contract contains an implied obligation of good faith and fair dealing, which requires the parties to act honestly and fairly. Under the UCC, an implied duty of good faith and fair dealing is imposed upon each party’s performance to a contract. Good faith is defined in the UCC as honesty in fact AND the observance of reasonable commercial standards of fair dealing. In the case of a merchant, good faith extends even further to observance of reasonable commercial standards of fair dealing in the trade. 0 exams ■■ Impossibility, Impracticability, & Frustration of Purpose • MED 0 of 24 Exams • Impossibility: Performance is discharged when it is objectively impossible to perform a contract because of: (1) death or physical incapacity of the person necessary to effectuate the contract (if the person can easily be replaced, performance is NOT excused); (2) unanticipated destruction of the subject matter necessary to fulfill the contract; OR (3) a new law or regulation that was unanticipated makes performance extremely and unreasonably difficult or expensive. The Restatement (Second) of Contracts substitutes the term “impossibility” with “impracticability”. Impracticability: Performance is discharged as impractical when (1) an event occurs after contract formation, (2) that is unanticipated by both parties at contract formation (the event’s non-occurrence was a basic assumption of the contact), (3) making performance extremely and unreasonably difficult or expensive. This doctrine is interpreted narrowly by the courts. Generally, an increased cost to perform a contractual obligation is NOT sufficient to render the contract excused due to impracticability. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 115 07 CONTRACTS • The Frustration of Purpose Doctrine discharges performance under a contract if the purpose of the contract no longer exists. Performance is excused if: (1) a party’s principal purpose is substantially frustrated without his fault (the contract is virtually worthless to the party); (2) by an unforeseeable supervening event outside of the parties’ control (the event’s non-occurrence was a basic assumption of the contact); AND (3) both parties knew the purpose at the time of formation. ■■ Minor Breach (Substantial Performance Doctrine) vs. Material Breach • MED 1 of 24 Exams • • Under the Common Law, a material breach will excuse the non-breaching party’s performance. A minor breach, however, will NOT excuse performance, and the nonbreaching party must still perform (though he may bring a separate action for damages resulting from the breach). A material breach occurs when a party DOES NOT render substantial performance (the party did not perform major parts of the contract). To determine whether a breach is material, courts will consider: (1) the extent of the benefit deprived to the injured party (what was the extent of performance); (2) the adequacy of compensation for loss to the non-breaching party; (3) the extent the breaching party will suffer forfeiture (hardship); (4) the likelihood that the breaching party will cure; and (5) absence of good faith or fair dealing by the breaching party (was the breach intentional, negligent, or innocent). Unless the agreement provides otherwise, the work must be substantially performed before payment can be demanded. MEE TIP Only apply this rule for contracts governed by the Common Law (non-UCC contracts). Feb 2012, Essay 3 ■■ Divisible Performance (Part Performances as Agreed Equivalents) • MED 1 of 24 Exams Unless otherwise agreed, a contract is divisible when: (1) the performances to be exchanged can be divided into corresponding pairs of part performances; (2) in a way that the elements of each pair will be treated as if the parties had agreed they were equivalents. Both elements MUST be satisfied. In such instance, the performance of one part of the contract will obligate the other party to perform their respective part (i.e. usually payment). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2012, Essay 3 116 07 CONTRACTS • The divisibility rule may only be applied where calculation of the parts are feasible. A purchase agreement may be divisible if the price of separate items is stated in the contract, stated on a price list (on which the contract was based), or can be reliably ascertained. ■■ UCC Perfect Tender Rule & Exceptions • MED 0 of 24 Exams • • • Under Article 2 of the UCC, a seller must deliver conforming goods. The smallest non-conformity is a breach and the buyer may reject all or a portion of the goods. However, two exceptions to this rule exist under the UCC: (1) if the seller has the right to cure; and (2) in the Installment contract context. A seller has a right to cure in 2 situations: (a) If the time for performance has NOT yet expired, the seller can cure within the contract time period remaining; OR (b) The seller is allowed additional reasonable time to substitute tender if it had reasonable grounds that the goods would be accepted (i.e. when the same type of non-conforming goods were accepted by the buyer in the past). Special rules apply when a seller provides non-conforming goods under an installment contract. Installment contracts may only be cancelled where an installment is so defective that it substantially impairs the value of the entire contract. Similarly, a buyer may reject an installment only if the non-conformity substantially impairs that installment and the time to cure has past. Under Article 2 of the UCC, a rejection of non-conforming goods must be made within a reasonable time after their delivery or tender. 0 exams ■■ UCC Acceptance of Goods & Revocation of Acceptance • HIGH 2 of 24 Exams • If a buyer fails to reject goods after a reasonable opportunity to inspect the goods, the buyer is deemed to have accepted the goods. The buyer is obligated to pay for the purchase once acceptance occurs (unless a revocation of acceptance is allowed), but may still sue for breach of contract if the buyer notifies the seller of the breach within a reasonable time. After the acceptance of goods, a buyer may later revoke that acceptance only if: (1) the nonconformity substantially impairs the value of the goods; AND (2) either the defect was difficult to discover (a latent defect) or the buyer accepted the goods on the reasonable assumption the defect would be cured. Revocation of acceptance MUST occur within a reasonable time after the buyer discovers or should © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2010, Essay 2 July 2004, Essay 7 117 07 CONTRACTS have discovered the nonconformity. The revocation is NOT effective until the buyer notifies the seller. In addition, the revocation of acceptance must occur before there is any substantial change in the goods, not caused by their own defects. If a buyer successfully revokes acceptance, he is entitled to return of the purchase price. ■■ Anticipatory Repudiation & Adequate Assurances • HIGH 2 of 24 Exams • • • Generally, a party must wait for the other party to breach before bringing an action to demand performance or for damages. However, a non-breaching party may seek damages before the time of performance is due if there is an anticipatory repudiation by the other party. An anticipatory repudiation occurs when a party unequivocally communicates that he is unable or unwilling to perform. A party that anticipatorily breaches a contract may retract its repudiation and restore the contract UNLESS the aggrieved party has: (a) cancelled; (b) materially changed his position; OR (c) indicated that he considers the repudiation final. In addition, a party with reasonable grounds for being insecure about the other party’s performance may demand in writing adequate assurances from the other party that it will perform in accordance with the contract. If a party DOES NOT give adequate assurances after it is asked to do so, the asking party may treat that as an anticipatory repudiation. When an anticipatory repudiation occurs, the non-breaching party may do any of the following: (a) treat the contract as repudiated and sue for damages; (b) treat the contract as discharged; (c) wait until performance is due and sue when performance does not occur; OR (d) urge the party to perform. July 2015, Essay 3 Feb 2013, Essay 2 ■■ Accord and Satisfaction • MED 0 of 24 Exams A party is excused from their obligations under a contract when there has been an accord and satisfaction. An accord is an executory contract between the parties promising to relieve a party of their contractual obligations in return for a specific act. Upon satisfaction of that act, that person is excused from further performance under the contract. If the party fails to satisfy the accord, the other party may sue either under: (a) the original contract; OR (b) the accord terms. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 118 07 CONTRACTS E. Warranties in Sales of Goods Contracts ■■ Express Warranty • MED 1 of 24 Exams Under Article 2 of the UCC, a seller is liable for a breach of an express warranty she makes to a buyer. An express warranty is created when (1) a seller makes an affirmation of fact, promise, or description, or provides a sample, (2) which relates to the goods, and (3) becomes part of the basis of the bargain. A seller need not intend to create an express warranty or directly use the words “warranty” or “guarantee” to create an express warranty. An OPINION does not create an express warranty (i.e. a seller’s praise or assertion of the value of the goods). Once a buyer discovers the breach of a warranty, he may sue for breach of contract. An express warranty CANNOT be disclaimed by a seller. July 2010, Essay 2 ■■ Implied Warranty of Merchantability • MED 0 of 24 Exams • Under Article 2 of the UCC, the Implied Warranty of Merchantability is implied in all sales of goods contracts, and requires that all goods sold by a merchant (a person dealing in goods of the kind) MUST be fit for their ordinary purpose. Once a buyer discovers the breach of a warranty, he may sue for breach of contract. While it is possible to disclaim the implied warranty of merchantability, a merchant must do so expressly in a conspicuous writing. Language of “as is” or “with all faults” or language that puts the buyer on notice will be sufficient for a disclaimer of the implied warranty of merchantability. 0 exams Note, the Implied Warranty of Merchantability was tested in a Torts essay on the July 2016 MEE (Essay 3, Point Two[a]) in the products liability context, and said rule is included in the Torts portion of the outline. ■■ Implied Warranty of Fitness for a Particular Purpose • MED 0 of 24 Exams • Under the UCC, an implied warranty of fitness for a particular purpose is created when: (1) a seller knows or has reason to know of the buyer’s particular purpose for which the goods are required; AND (2) the buyer relies on the seller’s skill or judgment to select or furnish suitable goods. If the above elements are met, the goods MUST be fit for the particular purpose of the buyer, otherwise there is a breach of warranty. An implied warranty of fitness may be disclaimed: (a) by a conspicuous writing; OR (b) through waiver if certain fitness defects can be reasonably discovered upon inspection by the buyer. Language is sufficient to disclaim a warranty for fitness if it states that “There are no warranties which extend beyond the description on the face hereof.” © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 119 07 CONTRACTS ■■ Warranty of Title • HIGH 2 of 24 Exams • • Under the UCC, warranty of title is implied in all sales of goods contracts, and includes the following warranties: (1) the title conveyed shall be good, and its transfer rightful; AND (2) the goods shall be delivered free from any security interest or other lien or encumbrance, unless the buyer has knowledge of the same. A seller who does not have title to goods generally CANNOT transfer title to a buyer. HOWEVER, if the true owner entrusts the possession of goods to a merchant (one who deals in goods of that kind), then the merchant has the power to transfer all rights the owner had to a buyer in the ordinary course of business. The implied warranty of title may be expressly disclaimed by specific language or by circumstances that puts the buyer on notice that the seller does not claim title. Feb 2003, Essay 2 July 2000, Essay 6 ■■ Limiting Damages for Breach of Warranty • MED 0 of 24 Exams By agreement, a seller may limit the buyer’s remedies for breach of a warranty so long as the limitation is NOT unconscionable at the time the contract was formed. However, there are two exceptions to this rule. Exception #1: Limiting a buyer’s remedy for personal injuries for consumer goods is presumed unconscionable (but a seller can rebut the presumption at trial). Exception #2: If a limited remedy “fails of its essential purpose,” the limited remedy will be set aside and the default remedy provisions of UCC Article 2 will apply. 0 exams F. Third-Party Rights ■■ Third-Party Beneficiaries & Enforcement of Rights • MED 1 of 24 Exams Generally, a party who is not in privity of contract with another party cannot assert a claim for breach against that party. However, when the party asserting the claim is an intended third-party beneficiary, the party has the same rights as those in privity of contract, and can assert a claim for breach. o An intended third-party beneficiary is not a party to the contract, but has rights under the contract because the contracting parties contemplated that their respective performances were intended to benefit an identified third-party. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 5 120 07 CONTRACTS An incidental beneficiary is a person that just happens to benefit from the contract, but has NO legal rights because the purpose of the contract was not intended to benefit them. Enforcement of an Intended Third-Party Beneficiary’s Rights: An intended third-party beneficiary may enforce rights under a contract ONLY IF the rights have vested. Rights vest when the third-party beneficiary has: (a) manifests assent to the promise under the contract; (b) detrimentally relied on the contract; OR (c) brings suit to enforce the contract. Once rights have vested, a contract CANNOT be changed or modified without the third-party’s consent. A suit may only be brought against the promisor (when the third-party is a creditor, a suit may also be brought against the promise). o • ■■ Assignment of Rights • MED 1 of 24 Exams • • Rights and benefits under a contract may be transferred to a third-party if: (1) the assignor manifests his intent to transfer the rights; AND (2) the assignee assents to the assignment. Consideration is NOT required for an assignment, BUT if consideration is provided, the assignment becomes irrevocable. Gratuitous assignments may subsequently be revoked. Limitations: An assignment is valid UNLESS: (a) it materially alters what is expected under the contract; (b) it is prohibited by law or public policy; OR (c) it is precluded by contract. Materially altering what is expected under the contract occurs when the assignment: (a) materially changes the duty of the obligor; (b) materially increases the burden or risk imposed on the obligor; (c) materially impairs the obligor’s chance of obtaining return performance; OR (d) materially reduces the value of the return performance. Parties may attempt to prevent assignments in the original contract through either: (a) Prohibitions: Terms in a contract that prohibit the transfer of rights. If the rights are assigned, the assignor is liable for damages, BUT the assignment is still valid and enforceable by the assignee; OR (b) Invalidations: Terms in a contract that void all assignments. If the rights are assigned in this case, the assignment is void. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 5 121 07 CONTRACTS • • Rights of Assignee and Assignor: An assignee may sue the obligor for non-performance. Any defense to enforcement that could be used against the assignor may also be used against the assignee. An assignee may also sue the assignor for wrongful revocation of an assignment or for breach of an implied warranty. Multiple Assignments: Where there are multiple gratuitous assignments, the last assignee prevails. Where there are multiple assignments for consideration, the first assignment prevails UNLESS the later assignment: (1) has no notice of the earlier assignment; AND (2) is the first to obtain payment or indicia of ownership. ■■ Delegation of Duties • MED 1 of 24 Exams All contract duties are delegable UNLESS: (a) the contract prohibits delegations or assignments; (b) the delegation is against public policy; (c) the contract is for personal services that calls for the exercise of personal skill or discretion; OR (d) the delegation materially alters the expectancy of the obligee (the party to which the duty is owed). An assignment generally includes a delegation of the unperformed duties under a contract. Generally, the obligor (the delegating/ assigning party) remains liable for non-performance of the contract, UNLESS all the parties agree otherwise (known as a novation). July 2016, Essay 5 G. Remedies ■■ Common Law Expectation Damages • HIGH 2 of 24 Exams The general measure of damages for a breach of contract are expectation damages. Expectation damages arise directly from the breach, and are an attempt to put the non-breaching party in the same position it would have been in but for the breach. To recover, the damages must be: (1) caused by the defendant (actual cause); (2) foreseeable (proximate cause); (3) certain (damages cannot be speculative); AND (4) unavoidable (the plaintiff must take reasonable steps to mitigate his losses). An award of damages must account and deduct for any costs the injured party avoided because of the breach. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2011, Essay 6 July 2008, Essay 8 122 07 CONTRACTS ■■ Consequential Damages • MED 1 of 24 Exams Consequential damages arise indirectly from the breach, and are awarded because of the injured party’s special circumstances. To recover, the damages MUST be: (1) reasonably foreseeable at the time of contract formation; (2) arise from the plaintiff’s special circumstances that the defendant knew or had reason to know of; AND (3) certain (the damages cannot be speculative). An award of damages must account for and deduct for any costs the injured party avoided because of the breach. July 2008, Essay 8 ■■ Punitive Damages • MED 1 of 24 Exams Punitive damages are awarded to punish a wrongdoing party. Punitive damages are generally NOT available in a breach of contract action, but may be awarded in a contract action involving corresponding tort claims that allow such damages (i.e. fraud). Feb 2011, Essay 6 ■■ Specific Performance • MED 0 of 24 Exams Specific Performance is an equitable remedy, and is only available if monetary damages are inadequate to compensate an injured party (i.e. contracts for the sale of real property). Specific performance is NOT available for employee/personal service contracts, BUT injunctive relief may be awarded. 0 exams ■■ UCC Seller’s Remedies & Damages • HIGH 2 of 24 Exams Seller’s Remedies: Under Article 2 of the UCC, when a buyer breaches a contract for the sale of goods, the seller has the following remedies: (a) withhold delivery of the goods; (b) cancel; (c) recover cover damages (the difference between the resale price and the contract price of the goods), which is used if the resale was made in good faith and in a commercially reasonable manner.; (d) recover market damages (the difference between the market price at the time and place for tender); (e) recover lost profits if the seller is a lost volume seller (a seller who regularly engages in the sale of the goods at issue and has unlimited inventory); (f) stop delivery of goods in the possession of a carrier or bailee when he discovers the buyer to be insolvent; (g) stop delivery of carload, truckload, planeload, or larger shipments of goods when the buyer breaches; OR (h) replevy identified goods in certain instances when the buyer is insolvent. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2015, Essay 3 Feb 1995, Essay 7 123 07 CONTRACTS • • Incidental Damages: A seller is also entitled to recover incidental damages, which include any commercially reasonable costs incurred resulting from the breach. Seller’s Right to Replevy Identified Goods: Under Article 2 of the UCC, an unpaid seller generally has no right to repossess (replevy) goods that he sent to a buyer. However, a seller of goods may repossess the goods he sent to a buyer if: (1) the buyer was insolvent when it received the goods; AND (2) the seller makes a demand within 10 days after the buyer received the goods. HOWEVER, if a misrepresentation of solvency had been made to the seller in writing within three months prior to the delivery of the goods, the 10-day limitation to make a demand no longer applies. ■■ UCC Buyer’s Remedies & Damages • HIGH 2 of 24 Exams • • • Under the UCC, when a seller breaches a contract, the buyer is entitled to either: (a) Cover Damages; (b) Market Damages; OR (c) Loss-in-Value Damages. In addition, the buyer may recover incidental and consequential damages. Cover Damages are the difference between the contract price and the price of substitute goods. This is used as the measure of damages if the buyer covered in good faith. Market Damages are used if the buyer did not cover in good faith or did not cover at all, and are the difference between the market price and the contract price. Loss-in-Value Damages are used if the buyer keeps the nonconforming goods, and is the difference between the value as promised and the value of the non-conforming goods. July 2010, Essay 2 July 2004, Essay 7 ■■ Waste Doctrine & Diminution in Value Damages • MED 1 of 24 Exams • Where a contractor’s performance has been incomplete or defective for a construction contract, the usual measure of damages is the reasonable cost of replacement or completion (expectation damages). However, when an award for the cost of completion is wasteful, a court may apply the waste doctrine, wherein the measure of damages becomes the difference in value of the property/land (diminution in value). The waste doctrine will apply if: (1) the contractor performs in good faith but defects nevertheless exist; AND (2) remedying the defects would entail economic waste (when the cost of completion greatly exceeds the value of the completed work). In such instance, diminution in value becomes the proper measure of damages. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2008, Essay 8 124 07 CONTRACTS • If the breach is willful and only completion of the contract will enable the non-breaching party to use the land for its intended purposes, the cost of completion is considered the appropriate damage award. ■■ Restitution (Unjust Enrichment) • HIGH 2 of 24 Exams • Restitution (also referred to as unjust enrichment or quantum meruit) is awarded to prevent unjust enrichment, and is available when one party confers a benefit onto another party (even if there is no enforceable contract). Damages will be awarded based on the value of the benefit conferred upon the defendant. A party CANNOT recover both expectation and restitution damages. Under the Restatement (Second) of Contracts, a party is entitled to restitution for any benefit that he has conferred by way of part performance in excess of the loss that he has caused by his own breach. Feb 2012, Essay 3 July 2010, Essay 2 ■■ Rescission • MED 0 of 24 Exams Rescission treats the original contract as cancelled. It is available if there was a problem with the formation of the contract (i.e. a defense to formation, fraud, misrepresentation). A contract will NOT be rescinded if: (a) a valid equitable defense applies; OR (b) the plaintiff sued for damages under the contract in a prior action. A plaintiff may sue for both damages and rescission at the same time. 0 exams ■■ Mitigation of Damages • MED 1 of 24 Exams A plaintiff CANNOT recover damages as a result of a breach that could have been avoided. Accordingly, a party must take reasonable steps to mitigate his losses. If he fails to do so, the court will reduce the total damages by the amount that could have been avoided. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2008, Essay 8 125 08 CRIMINAL LAW & PROCEDURE MPC = Model Penal Code MEE TIP MEE TIP You must know and keep in mind the four elements of a crime when working through an essay question, even though many past essay questions have focused on a specific crime element (i.e. mental state, physical act, or causation). Elements of a Crime (Mens Rea, Actus Reus, Causation, & Concurrence) In order to be guilty of a crime, the prosecution must prove that the defendant is guilty of ALL elements of the crime beyond a reasonable doubt. Every crime has four elements: (1) a physical act (the actus reus); (2) a mental state element (the mens rea); (3) causation (both actual and proximate cause); and (4) concurrence (the mental state and physical act occur at the same time). Pay attention to the essay question to see if the examiners direct which law to apply. On past exams, the examiners have provided the applicable law of the jurisdiction (i.e. Model Penal Code, the M’Naghten Test, or have even provided the statutory elements of burglary and theft). If you are not directed which law to use, then apply general principles of criminal law and procedure. A. General Principles ■■ Elements of a Crime: Acts and Omissions • MED 0 of 24 Exams The Physical Act (the actus reus) of the defendant must be voluntary. Generally, an omission (a failure to act) is NOT criminal UNLESS: (1) the defendant had a legal duty to act; (2) the defendant had knowledge of facts concerning the duty to act; AND (3) it was reasonably possible for the defendant to act. A duty to act arises by: a contractual duty; parent-child relationship; a duty taken on voluntarily (including police officers or official duties); a statute that creates a duty; or where the defendant creates the danger. ■■ Elements of a Crime: • HIGH 2 of 24 Exams • 0 exams Causation Causation requires both: (1) actual causation (also called cause-in-fact or “but for” causation); AND (2) proximate cause. Actual causation is present when the result (i.e. injury) would not have occurred “but-for” the defendant’s conduct. Proximate cause requires asking if it was foreseeable that the injury would have resulted from the defendant’s physical act (was it a natural a probable consequence). A Superseding Intervening Cause is a third party’s act that breaks the chain of causation, which normally cuts off the defendant’s liability. However, a third party’s act will only break the chain if the intervening force was: (1) independent of the defendant’s wrongful conduct; AND (2) not foreseeable (it was so out-of-the-ordinary that it is not fair to hold the defendant criminally responsible). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2012, Essay 2 July 2007, Essay 5 126 08 CRIMINAL LAW & PROCEDURE • Under the Simultaneous Acts Rule, a person’s act will still be the proximate cause of a resulting injury if his wrongful conduct created a condition of peril, even if later negligent events combined to cause the injury (so long as the later events are foreseeable). Similarly, a defendant’s wrongful act that accelerates death is still the legal cause of death, even if the person was going to die eventually. ■■ Elements of a Crime: • HIGH 2 of 24 Exams • • • Mental States The Mental State (the mens rea or intent element) is explicitly stated in the statute for the specific crime the defendant is charged with. Under the Common Law four mental state categories were used: Specific Intent (intent or desire to engage in the conduct or cause a certain result); General Intent (awareness of acting a certain way); Malice (reckless disregard of a known risk that harm may occur); and Strict Liability (no mental state is required, only that the act occurs). A mistake of fact is generally NOT a defense to strict liability crimes. The Model Penal Code (MPC) applies the following categories of intent to crimes: o A person acts purposefully if it’s his conscious object to engage in the conduct or cause a certain result. o A person acts knowingly if he is aware that his conduct is of a particular nature or will cause a certain result to occur. o A person acts recklessly if: (1) he consciously disregards a substantial and unjustifiable risk that a certain result would occur; AND (2) the action is a gross deviation from how a reasonable law-abiding person would act. A person who creates such a risk, but is unaware of it solely because of voluntary intoxication, also acts recklessly. o A person acts with criminal negligence if: (1) he should have been aware of a substantial and unjustifiable risk; AND (2) that failure to perceive the risk is a gross deviation from what a reasonable prudent person would observe in similar circumstances. A majority of states use the Willful Blindness Standard, wherein a person can be deemed to act knowingly when he: (a) is aware that certain facts are highly probable; OR (b) is intentionally ignorant to certain facts. A minority of jurisdictions reject the willful blindness standard, and require actual knowledge. In such a jurisdiction, knowledge may be proved by circumstantial evidence. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP Apply the appropriate mental state(s), depending on the fact pattern and the call of the essay question. July 2012, Essay 2 July 2010, Essay 8 127 08 CRIMINAL LAW & PROCEDURE B. Homicide ■■ Murder • HIGH 2 of 24 Exams • • • Under the Common Law, murder is the unlawful killing of a person with malice aforethought. Malice aforethought is established upon a showing of: (a) an intent to kill; (b) an intent to inflict great bodily injury; (c) a reckless disregard of an extreme risk to human life (depraved-heart murder), such as shooting a gun in a crowded room; OR (d) an intent to commit an inherently dangerous felony under the Felony Murder Rule. Murder may be reduced to Voluntary Manslaughter if there was adequate provocation. Some jurisdictions divide murder into degrees. In these jurisdictions, second-degree murder is the (1) unlawful killing, (2) of a person, (3) with malice aforethought. First degree murder occurs when the killing was deliberate and premeditated. Under the Model Penal Code (MPC), murder is a killing of a person, committed: (a) purposely or knowingly; OR (b) recklessly under circumstances manifesting an extreme indifference to the value of human life. Under the Felony Murder Rule, such recklessness and indifference are presumed if the killing occurred during the commission of or attempt to commit a dangerous felony (robbery, rape, arson, burglary, kidnapping) or felony escape. Reckless driving alone usually DOES NOT constitute a depraved-heart murder, unless it was combined with other aggravating factors (i.e. intoxication). July 2015, Essay 5 July 2007, Essay 5 Depraved-Heart Murder was mentioned and analyzed in the model essay answer to the July 2015 MEE (Essay 5, Point Two), but the primary rule tested was Manslaughter. ■■ Manslaughter • HIGH 2 of 24 Exams • Voluntary manslaughter is an intentional killing of a person with adequate provocation. An adequate provocation reduces the murder charge to manslaughter. Adequate provocation is established if: (1) the defendant was provoked (a sudden and intense passion caused him to lose control); (2) a reasonable person would have been provoked; (3) there was not enough time to cool off before the killing; AND (4) the defendant did not cool off before the killing. Involuntary manslaughter is an unintentional killing of a person committed: (a) recklessly (conscious disregard of an unreasonable risk of death or serious bodily injury); (b) under the misdemeanor-murder rule (a killing that results during the commission of a misdemeanor); OR (c) during a non-dangerous felony (a felony not included under the felony © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2015, Essay 5 July 2012, Essay 2 128 08 CRIMINAL LAW & PROCEDURE • murder rule). In some jurisdictions, involuntary manslaughter may result from criminal negligence: (1) the defendant knew or should have known that his conduct had a high or unreasonable risk of death, and (2) his actions were a gross deviation from how a reasonable person would have acted. Under the Model Penal Code (MPC), manslaughter is a killing of a person: (a) committed recklessly (conscious disregard of a substantial and unjustifiable risk of death or great bodily injury); OR (b) which would otherwise be murder, but is committed under the influence of extreme mental or emotional disturbance for which there is reasonable explanation or excuse. The MPC does not distinguish between voluntary and involuntary manslaughter. C. Other Crimes ■■ Theft Crimes & Receiving Stolen Property • HIGH 3 of 24 Exams • Theft crimes include the common law crimes of larceny, false pretenses, and embezzlement. o Larceny is the (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. The intent to permanently deprive MUST exist at the time of the taking. Larceny by trick occurs when one obtains possession (not title) of the personal property of another by trick or deception. o False Pretenses occurs when one (1) obtains title, (2) to personal property of another, (3) through a known false statement of material fact, (4) with intent to defraud. An opinion or commercial puffery is generally NOT considered to be false pretenses. o Embezzlement is (1) the 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 is a crime when a person (1) receives possession of stolen property, (2) who knows the property is stolen at the time of receiving it, (3) with the intent to permanently deprive the owner of the property. Under the modern view, knowledge that the property is stolen can be inferred from all surrounding circumstances. In some jurisdictions, proof of actual subjective knowledge is required. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 6 Feb 2014, Essay 5 July 2010, Essay 8 Theft was analyzed in the Feb. 2014 MEE (Essay 5, Point One) model essay answer, but the statute for theft was provided in the essay question. The primary issue tested was Double Jeopardy. 129 08 CRIMINAL LAW & PROCEDURE ■■ Robbery • MED 0 of 24 Exams Robbery is the (1) trespassory taking and carrying away, (2) of the personal property of another person, (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 requires the elements above plus the use of a dangerous weapon (i.e. gun, knife). ■■ Burglary • HIGH 2 of 24 Exams Burglary is (1) the breaking and entering (entry without consent, through an unlocked door/window, or even partial entry is sufficient), (2) of a dwelling, (3) of another, (4) at night, (5) for the purpose of committing a felony inside. Most jurisdictions have extended burglary to include any structure at any time. ■■ Rape & Statutory Rape • MED 0 of 24 Exams • Rape: Under the Common Law, rape is (1) the unlawful sexual intercourse, (2) of a woman by a man (not her husband), (3) without her consent. Under the common law, a husband could NOT be convicted of raping his wife. Today, the modern definition of rape now includes marital rape (in most states) and makes gender irrelevant (of both the perpetrator and the victim). Rape is a general intent crime, and the slightest penetration completes the crime. o A lack of effective consent exists when: (1) actual force is used; (2) threats of immediate great bodily harm are used; (3) the victim is incapable of consenting (i.e. drunk, unconscious, or medical condition); (4) the defendant fraudulently caused the victim to believe that the act is not intercourse (fraudulent inducement or promises are NOT sufficient). Under the Model Penal Code (MPC), a male who has sexual intercourse with a female (not his wife) is guilty of rape if: (a) he compels her to submit by force or by threat of imminent death, serious bodily injury, extreme pain, or kidnapping (to be inflicted on anyone); (b) he has substantially impaired her power to consent by secretly drugging her; (c) the female is unconscious; OR (d) the female is less than 10 years old. Under the MPC, Deviate Sexual Intercourse has the same elements as above, but is gender neutral. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams The crime of armed robbery was mentioned in the July 2009 MEE (Essay 7, Point Two), but was not the issued tested. The rule for Attempt was the actual issue tested. Feb 2019, Essay 6 Feb 2014, Essay 5 Burglary was analyzed in the Feb. 2014 MEE (Essay 5, Point One) model essay answer, but the statute for burglary was provided in the essay question. The primary issue tested was Double Jeopardy. 0 exams 130 08 CRIMINAL LAW & PROCEDURE • Statutory rape is (1) the unlawful sexual intercourse, (2) with a person, (3) under the age of consent (as defined by statute), regardless of whether it is against that person’s will. Statutory rape is a strict liability crime (no intent is required), and a mistake of fact as to the person’s age is NOT a defense. ■■ Assault and Battery • MED 0 of 24 Exams • Battery is the (1) unlawful application of force, (2) directly or indirectly upon another person, their clothes, or close personal belongings, (3) that results in injury or offensive contact. Battery is a general intent crime, meaning the prosecution need only prove that the unlawful act itself was intended; intent to cause injury is NOT required. Assault is either: (a) an attempted battery; OR (b) the intentional creation of a reasonable apprehension of imminent bodily harm to a person. 0 exams ■■ Kidnapping & False Imprisonment • MED 0 of 24 Exams • Kidnapping: Under the Common Law, kidnapping is the (1) confining, restraining, or moving of a person, (2) without authority of law. Under the Model Penal Code (MPC), a person is guilty of kidnapping when he abducts another person for one of the following purposes: (a) his intent is to compel a third person to pay ransom; (b) to facilitate the commission of a felony; (c) to inflict bodily injury or terrorize the victim; OR (d) to interfere with the performance of any governmental or political function. False imprisonment involves the (1) unlawful, (2) confinement of a person, (3) against their will, (4) with knowledge that the restriction is unlawful. Under the MPC, a person commits false imprisonment if he knowingly restrains another person unlawfully so as to substantially interfere with the person’s liberty. 0 exams Arson is the (1) malicious (intentional or reckless), (2) burning, (3) of a dwelling, (4) of another. A majority of states have included damage caused by explosives, and have also expanded the types of structures destroyed to include other types of buildings and vehicles. Under the Common Law, a person could NOT be convicted of arson when burning their own home (and instead would be guilty of misdemeanor house burning). 0 exams ■■ Arson • MED 0 of 24 Exams © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 131 08 CRIMINAL LAW & PROCEDURE ■■ Criminal Possession Offenses • MED 0 of 24 Exams A criminal possession charge normally involves the unlawful possession of an item (i.e. weapon or controlled substance) according to the jurisdiction’s applicable statute. To be found guilty, usually the person must have BOTH: (1) knowledge of the possession (that he is possessing the item); AND (2) knowledge of what the item is (i.e. that the item is a weapon). For drug offenses, knowledge usually DOES NOT extend to the amount or weight of the substance. 0 exams D. Inchoate Offenses ■■ Attempt • MED 1 of 24 Exams • • In most states, a person is guilty of attempt if the person: (1) had the specific intent to commit a crime; AND (2) took an overt act sufficiently beyond mere preparation. o Most states and the Model Penal Code require that the overt act be a “substantial step” toward the completion of that crime. o A minority of states require that the overt act be “proximate” or “dangerously proximate” to the crime. The attempt merges with the underlying crime. Thus, a person CANNOT be convicted for attempting to commit a crime and the crime itself. Legal impossibility is a defense to an attempt crime, but factual impossibility is NOT a defense. Abandonment/Withdrawal Defense: In most jurisdictions, abandonment or withdrawal is NOT a defense to attempt once the person has taken a substantial step (conduct beyond mere preparation) toward the completion of the crime. In a minority of jurisdictions and the Model Penal Code, abandonment before the completion of the crime is an affirmative defense to attempt if: (1) the defendant voluntarily renounces his criminal purpose (abandonment resulting from any extrinsic factor is not deemed voluntary); AND (2) completely abandons the effort to commit the crime or otherwise prevents its commission. July 2009, Essay 7 ■■ Conspiracy • MED 0 of 24 Exams Conspiracy is a specific intent crime, and requires: (1) an express or implied agreement between two or more people; (2) intent to enter into the agreement; (3) intent to pursue an unlawful objective (at common law this element would be required to be met by ALL parties of the agreement, © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 132 08 CRIMINAL LAW & PROCEDURE • while the modern trend & MPC only require it to be met by ONE party); AND (4) the commission of an overt act in furtherance of the unlawful objective (under common law no overt act was required). The overt act DOES NOT need to be criminal in nature; any act (including preparation) taken by a co-conspirator in furtherance of the unlawful objective is sufficient. Co-conspirators are liable for BOTH the conspiracy itself AND all foreseeable crimes committed by other co-conspirators in furtherance of the unlawful objective. Conspiracy DOES NOT merge with the completed crime, and therefore a defendant can be charged with the conspiracy to commit the crime and the crime itself. Withdrawal is NOT defense to the conspiracy, but is a defense for crimes committed by co-conspirators after the withdrawal. ■■ Solicitation • MED 0 of 24 Exams • A person is guilty of solicitation if: (1) he requests another person to commit a crime (or join in the commission of a crime); (2) with the specific intent that the crime be committed; AND (3) the other person receives the request. Solicitation merges with the substantive offense. Generally, there are NO defenses once the solicitation is complete. However, some states and the Model Penal Code recognize Renunciation as an affirmative defense to solicitation, which requires the defendant: (1) to voluntarily and completely renounce; AND (2) prevent the commission of the crime. 0 exams E. Parties to a Crime ■■ Accomplice Liability • MED 1 of 24 Exams An accomplice is one who: (1) aids, abets, or facilitates the commission of a crime; AND (2) has dual intent (intent to assist the primary party, and intent that the crime is committed). If the substantive crime involves recklessness or negligence, the intent requirement will be satisfied if the defendant acted with the requisite intent for the underlying crime. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2012, Essay 2 133 08 CRIMINAL LAW & PROCEDURE • • • An accomplice is liable for ALL crimes he committed/ assisted AND all foreseeable crimes committed by the principal (the person who actually committed the crime). It is irrelevant whether the accomplice actually committed the crime. The accomplice can be convicted, even if the primary actor is acquitted. However, certain limitations exist to accomplice liability. First, merely being present when a crime is committed (or knowing that a crime might result) will NOT create accomplice liability. Second, a person cannot be convicted if: (a) the person is a member of the class of persons protected by the criminal statute; OR (b) the crime inherently involves several types of participants and the person is not criminally liable under the statute. Third, a minority of jurisdictions DO NOT allow accomplice liability for involuntary manslaughter as a matter of law; although most jurisdictions do allow it. Withdrawal is a defense to liability and is valid ONLY IF the accomplice withdraws his involvement before the crime becomes unstoppable. Withdrawal can be accomplished by either (a) repudiating the encouragement given; or (b) neutralizing the assistance (if more than encouragement was given). F. Defenses ■■ Duress • MED 1 of 24 Exams The affirmative defense of duress excuses a defendant’s conduct if it was the result of (1) a threat of imminent death or serious bodily injury, (2) to the defendant or another, AND (3) the defendant reasonably believed he was unable to avoid the harm by non-criminal conduct. The defendant MUST reasonably believe that the only way to avoid imminent death or serious bodily injury to himself or to another is to engage in the criminal conduct. In most jurisdictions, this defense is NOT available for intentional killings. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2015, Essay 5 134 08 CRIMINAL LAW & PROCEDURE ■■ Insanity • HIGH 2 of 24 Exams • • A defense of insanity for a severe mental defect or disease will be analyzed under one of four tests, all of which consider the defendant’s mental state at the time of the offense: o The M’Naghten Test: (1) A mental disease or defect that (2) resulted in the defendant being: (a) unable to know the wrongfulness of his conduct; OR (b) unable to understand the nature and quality of his acts. Some states have defined wrongful as a legal wrong (that the act was criminal), while other states define wrongful as morally wrong (an act condemned by society). o The Model Penal Code Test: As a result of a mental disease or defect, the defendant was: (a) unable to appreciate the criminality of his conduct; OR (b) unable to conform his actions to the law. o The Irresistible Impulse Test: The defendant’s mental illness made him: (a) unable to control his actions; OR (b) unable to conform his actions to the law. o The Durham Test: The defendant must show that his unlawful conduct was the product of mental illness. A defendant will be acquitted of the crime if he meets the applicable insanity test of the jurisdiction. Most states use either the M’Naghten or the Model Penal Code test. Most states require the defendant to prove insanity by the preponderance of the evidence (or by clear and convincing evidence in federal court). However, some states require the prosecution to prove that the defendant was not insane beyond a reasonable doubt. ■■ Justification: • MED 0 of 24 Exams Feb 2018, Essay 2 July 2015, Essay 5 MEE TIP Pay attention if the bar examiners tell you which insanity test to apply. On both the Feb 2018 MEE (Essay 2) and July 2015 MEE (Essay 5), the examiners instructed that the jurisdiction in the fact pattern followed the M’Naghten test. Self-Defense & Defense of Others Self-defense is a complete defense to a crime. o The use of non-deadly force is justified when (1) the defendant reasonably believes, (2) that he is in imminent danger of being harmed. o The use of deadly force is justified when (1) the defendant kills another 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 to defend against the danger. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 135 08 CRIMINAL LAW & PROCEDURE • • • • In a minority of jurisdictions, there is a duty to retreat before deadly force may be used. In those jurisdictions, the defendant must show that: (a) there was no opportunity to retreat; OR (b) retreat could not have been accomplished safely. There is NO duty to retreat if the defendant was attacked in her own home. An aggressor (the person who starts the altercation) may only use force in self-defense if: (a) he withdraws from the altercation and communicates such intent; OR (b) the other person suddenly escalates the fight with deadly force and withdrawal is not possible. The same rules for self-defense apply to the defense of others. Imperfect self-defense is a mitigating defense to murder that can reduce a murder charge to voluntary manslaughter. Imperfect self-defense is applicable when the defendant kills another based on a good faith belief that (1) she was in imminent danger of being killed or suffering great bodily injury; AND (2) the use of deadly force was necessary to defend against the danger; BUT (3) at least one of those beliefs was unreasonable. Only some courts allow imperfect self-defense to be applied to situations where the defendant was defending another person. ■■ Intoxication • MED 0 of 24 Exams • Voluntary intoxication (the ingestion of an intoxicating substance by the defendant’s own free will) is ONLY a defense to specific intent crimes if it negates the state of mind required to commit the offense. Involuntary intoxication (the ingestion of an intoxicating substance by force or without knowledge of its nature/effect) is a defense to all crimes if the defendant is deemed insane at the time of the offense. This defense is analyzed under the insanity test of the particular jurisdiction. 0 exams ■■ Mistake of Fact or Law • MED 0 of 24 Exams • A mistake of fact is a defense to a crime if it negates the state of mind required for the offense. For specific intent crimes, the mistake of fact may be unreasonable. For general intent, negligent, or reckless crimes, the mistake must be reasonable. A mistake of law (not knowing the activity was illegal) is generally NOT a defense to a crime. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 136 08 CRIMINAL LAW & PROCEDURE G. Arrest, Search, and Seizure (4th Amendment) MEE TIP Use the following framework to analyze 4th Amendment search and seizure issues on the exam: Step 1: Does the contesting person have a 4th Amendment right?  If so, then apply the “Fourth Amendment Right – Government Action & Standing” rule. • Need both: o Government Action, and o Standing Step 2: Is the person contesting an arrest?  If so, then apply the “Arrests” rule. Step 3: Is the person contesting his temporary seizure (and resulting search of his person)?  If so, then apply the “Request for Information, Stop and Inquire, & Stop and Frisk” rule. Step 4: Is the person contesting a search?  If so, then apply the “Warrant Requirement for All Searches, Unless an Exception Applies” and Warrant Exception rules. • Generally, analyze the following: o Was the search conducted pursuant to a valid warrant?  If so, then search is valid. o If no valid search warrant, does an exception apply?  If so, search is valid.  If not, then the evidence is generally excluded at trial. ■■ Fourth Amendment Right – Government Action & Standing • MED 1 of 24 Exams • Under the 4th Amendment of the U.S. Constitution, a person is granted protection from unlawful government searches and seizures. Acts by private individuals are NOT protected by the 4th Amendment. In order to challenge a search or seizure, the challenging party MUST have standing. To have standing, the challenger must have a reasonable expectation of privacy regarding the item or place searched. Courts have held that individuals have a reasonable expectation of privacy in that of which they own or possess. The U.S. Supreme Court has extended this doctrine to permit an overnight guest to challenge a warrantless search in a home in which © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2009, Essay 7 137 08 CRIMINAL LAW & PROCEDURE he was staying. However, courts have held that people DO NOT have a reasonable expectation of privacy in the following: (1) a paint scrapping taken from one’s car; (2) a person’s bank account records; (3) anything visible from public airspace; (4) garbage left on the curb; (5) the sound of one’s voice; (6) odors coming from one’s property; (7) one’s handwriting; and (8) anything that can be seen in or across areas outside one’s home. ■■ Arrests • MED 1 of 24 Exams • • Under the 4th Amendment of the U.S. Constitution, a person has the right to be free from unlawful searches and seizures by the government. Seizure under the 4th Amendment includes arrests. For an arrest to be proper, the police officer MUST have probable cause. Probable cause arises when the police officer (1) has trustworthy facts or knowledge, (2) sufficient to warrant a reasonable person to believe, (3) that the person committed a crime. If a police officer has probable cause to believe that a person has committed even a very minor criminal offense in his presence, he may arrest that person without violating the 4th Amendment. A police officer DOES NOT need firsthand knowledge to have probable cause; it may be based on the firsthand knowledge of another (i.e. an informant). If an arrest is conducted in a public place, probable cause is all that is required. However, a warrant is required if a police officer arrests someone in or at their home (unless exigent circumstances exist). July 2011, Essay 2 ■■ Request for Information, Stop and Inquire, & Stop and Frisk • MED 1 of 24 Exams • • Under the 4th Amendment of the U.S. Constitution, a person is granted protection from unlawful government searches and seizures. A seizure occurs when a reasonable person would have believed that he was not free to leave. The police may make a request for information anytime except on “whim or caprice.” A police officer may stop and inquire if the police officer (1) has reasonable articulable suspicion, (2) that criminal activity is afoot. A stop and inquire allows only a brief detention for questioning, after which the suspect must be released. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2008, Essay 8 138 08 CRIMINAL LAW & PROCEDURE • • A police officer may only stop and frisk a person if the police officer (1) has reasonable articulable suspicion, (2) that criminal activity is afoot, AND (3) that the person has a weapon. Under the plain feel doctrine, a police officer may only seize items he or she reasonably believes is contraband or a weapon during the frisk. Reasonable suspicion is defined as the quantum of knowledge sufficient to induce an ordinarily prudent and cautious person under the circumstances to believe that criminal activity is at hand. Courts use a sliding scale based on the particular factual circumstances to determine whether reasonable suspicion was present. ■■ Warrant Requirement for All Searches, Unless an Exception Applies • HIGH 2 of 24 Exams • • The 4th Amendment of the U.S. Constitution provides that everyone should be free from unreasonable searches and seizures. Thus, a police officer will need a warrant to conduct a search and to seize items, unless a valid exception applies. In order for a search warrant to be valid: (1) there must have been probable cause (reliable information that it is likely that evidence of illegality will be found at a particular location); (2) the warrant must state with particularity the place to be searched and the items to be seized; AND (3) it must be issued by a neutral and detached magistrate. Evidence obtained without a valid warrant should be excluded unless it falls under the exceptions that permit a warrantless search and seizure. The warrant exceptions are: (1) plain view doctrine; (2) exigent circumstances; (3) the automobile exception; (4) a search incident to an arrest; (5) consent; (6) inventory searches; (7) stop and frisk; and (8) where the U.S Supreme Court has concluded there is a special need. ■■ Exception to Warrant Requirement: • MED 1 of 24 Exams Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2009, Essay 7 MEE TIP For search and seizure questions, also apply any relevant warrant exception rules based upon the fact pattern and the call of the essay question. Plain View Doctrine Under the Plain View Doctrine, the police may seize evidence without a warrant if (1) it is observed in plain view (with any of the five senses), (2) from a place the officer is lawfully permitted to be, AND (3) probable cause exists to believe that the items are evidence of a crime or contraband. © 2019 SmartBarPrep.com July 2011, Essay 2 July 2011, Essay 2 139 08 CRIMINAL LAW & PROCEDURE ■■ Exception to Warrant Requirement: • MED 0 of 24 Exams Exigent Circumstances Exigent circumstances exist if: (a) the evidence is evanescent (the evidence would dissipate or disappear in the time it would take to obtain a warrant); (b) it’s necessary to prevent the imminent destruction of evidence; (c) the police are in hot pursuit of a felon and the evidence is in plain view; OR (d) the emergency aid exception applies – to render emergency assistance to an injured person or to protect a person from imminent injury. 0 exams ■■ Exception to Warrant Requirement: Automobile Exception • MED 1 of 24 Exams The automobile exception allows a warrantless search of a car where the police have probable cause that either contraband OR evidence of a crime will be found in the vehicle. If there is probable cause, the police can search the entire vehicle AND any packages, luggage, or containers that may reasonably contain the items for which there is probable cause. In order to search a vehicle after a traffic stop, the police officer would need to acquire probable cause prior to searching the vehicle. A police officer DOES NOT need firsthand knowledge to have probable cause; it may be based on the first-hand knowledge of another. ■■ Exception to Warrant Requirement: • MED 0 of 24 Exams • MED 0 of 24 Exams Search Incident to Arrest Under the 4th Amendment of the U.S. Constitution, a police officer who has probable cause to make an arrest can make a warrantless search incident to a lawful arrest. In this regard, he can search not only the suspect’s person, but also areas within the suspect’s “wingspan”. If the suspect is arrested in an automobile, the “wingspan” includes the passenger’s compartment. In addition, pursuant to a lawful arrest, a police officer can make a warrantless search of an automobile (or any containers found in the car) if he has reason to believe it contains contraband. ■■ Exception to Warrant Requirement: Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams Consent Consent is an exception to the warrant requirement if it is given freely, voluntarily, and intelligently. A third person with possessory rights of the property may consent to a search, but that person must have authority. If the police have reason to know that the person consenting might not have authority, and they continue the search, the search is unlawful. © 2019 SmartBarPrep.com July 2011, Essay 2 0 exams 140 08 CRIMINAL LAW & PROCEDURE • When two or more people share common authority over the residence or premises, any one of them may consent to a lawful search. However, a police officer may only search common areas of the residence and private areas of the person providing the consent. A warrantless search of private areas (i.e. bedrooms and locked areas) of persons that did not provide consent is generally unlawful. ■■ Exception to Warrant Requirement: • MED 0 of 24 Exams Inventory Search An inventory search and seizure (either of a defendant’s possessions during incarceration or of a vehicle impounded following the lawful arrest of the driver) is an exception to the warrant requirement of the 4th Amendment of the U.S. Constitution. To be valid, an inventory search must be both: (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). 0 exams H. Confessions, Privilege Against Self-Incrimination, and Right to Counsel ■■ Confessions: • MED 1 of 24 Exams • 14th Amendment Due Process Clause A defendant’s confession may be excluded at trial under the 5th, 6th, or 14th Amendments of the U.S. Constitution. Under the 14th Amendment Due Process Clause, if a confession is the product of police coercion that overbears the suspect’s free will, then the confession is inadmissible. The police may use coercive conduct (i.e. lying) UNLESS the coercion overcomes the defendant’s free will. When determining whether a confession overcame a person’s free will, courts consider: (1) the characteristics of the interrogation (i.e. length of the interrogation and police tactics used); AND (2) the characteristics of the individual (i.e. age and experience). MEE TIP For confessions prior to the defendant being charged with a crime, analyze the problem under the 5th and 14th Amendments. For confessions that occur after a defendant is charged with a crime, then also apply the 6th Amendment. Feb 2008, Essay 8 ■■ Confessions: 5th Amendment Privilege Against SelfIncrimination & Miranda Rights • HIGH 5 of 24 Exams A defendant’s confession may be excluded at trial under the 5th, 6th, or 14th Amendments of the U.S. Constitution. Under the 5th Amendment Privilege Against Self-Incrimination, a person has a right to not incriminate oneself and MUST be given Miranda warnings during a custodial interrogation. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 5 July 2016, Essay 2 July 2014, Essay 1 July 2011, Essay 2 Feb 2008, Essay 8 141 08 CRIMINAL LAW & PROCEDURE • • • • • Miranda warnings inform suspects that: (1) they have the right to remain silent; (2) anything they say can be used against them in court; (3) they have the right to talk to an attorney and have one present when they are questioned; AND (4) if they cannot afford an attorney, an attorney will be provided to them. Miranda rights attach when there is a custodial interrogation of a suspect. If a person is not subject to a custodial interrogation, no Miranda warnings need to be given. o A person is in custody when they reasonably believe they are not free to leave. o A person is subject to interrogation when the police knew or should have known that their conduct was likely to elicit an incriminating response. Miranda rights only protect statements or acts that are communicative or testimonial in nature. In order to be testimonial, an accused’s communication must (explicitly or implicitly) relate to a factual assertion or disclose information. Crying is NOT considered a testimonial communication. Additionally, Miranda rights DO NOT apply to any spontaneous statements made by a person. Under the Public Safety Exception, limited interrogation without Miranda warnings IS ALLOWED when police officers ask questions reasonably prompted by a concern for public safety OR the safety of the officer (i.e. to secure a weapon). When invoking a Miranda right, it MUST be clear and unambiguous. For example, merely stating “I think I need a lawyer” or “maybe I should talk to a lawyer” is insufficient. The police have no obligation to stop questioning a suspect if the request is not clear and unambiguous. o Once the right to remain silent is invoked, the police may later question the suspect if they first scrupulously honor his right to remain silent. Additionally, if the right is invoked, the defendant’s silence CANNOT be commented on by the prosecution or be used to incriminate him at trial. o Once the right to counsel is invoked, the police must stop questioning the suspect on ANY crime until the suspect has spoken with an attorney. However, a custodial interrogation may be reinitiated if: (1) the suspect has been re-advised of his Miranda rights; (2) has provided a knowing and voluntary waiver; AND (3) either (a) counsel is present, (b) the suspect initiates the communication, or (c) at least 14 days have passed since the suspect was © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 142 08 CRIMINAL LAW & PROCEDURE • • released from custody. A suspect’s statement that clearly indicates a willingness to speak about matters relating to the investigation is treated as an initiation of communication, but questions or comments relating to routine incidents of being in custody do not. A suspect may waive his Miranda rights. A valid waiver must be made: (1) voluntarily (it is the product of the defendant’s free will); AND (2) knowingly and intelligently (the defendant must understand the nature of the right being waived and the consequences for waiving it). o When determining whether a confession overcame a person’s free will, courts consider (1) the characteristics of the interrogation (i.e. length of the interrogation and police tactics used); AND (2) the characteristics of the individual (i.e. age and experience). o The police may use coercive conduct (i.e. lying) UNLESS the coercion overcomes the defendant’s free will. Police failure to provide the defendant with outside information (such as efforts by his attorney to reach him) DOES NOT invalidate a waiver UNLESS the information withheld was essential to the defendant’s ability to make a valid waiver. A defendant/suspect’s statements made in violation of his Miranda rights are subject to the Exclusionary Rule. ■■ Confessions: • MED 1 of 24 Exams • 6th Amendment Right to Counsel A defendant’s confession may be excluded at trial under the 5th, 6th, or 14th Amendments of the U.S. Constitution. Under the 6th Amendment of the U.S. Constitution, the accused has the right to counsel in all criminal prosecutions (except State misdemeanor prosecutions that do not carry a risk of jail time). The right to counsel attaches once formal adversarial judicial proceedings have been commenced (i.e. formal charge, preliminary hearing, indictment, or arraignment). The 6th Amendment right to counsel is offensespecific. Thus, it only applies to the offenses the defendant has formally been charged with, and DOES NOT prevent the police from questioning the defendant about unrelated offenses without an attorney. Once a suspect’s right to counsel has attached, any attempts to deliberately elicit statements from him in the absence of his attorney violate the 6th Amendment. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2014, Essay 1 143 08 CRIMINAL LAW & PROCEDURE • The right to counsel may be waived. A valid waiver must be made: (1) voluntarily (it is the product of the defendant’s free will); AND (2) knowingly and intelligently (the defendant must understand the nature of the right being waived and the consequences for waiving it). ■■ Right to Counsel & Effective Assistance of Counsel at Trial • MED 0 of 24 Exams • Under the 6th Amendment of the U.S. Constitution, the accused has the right to counsel in all criminal prosecutions that carry a substantial risk of jail time (more than 1 year), including at trial. The right to counsel attaches once formal adversarial judicial proceedings have been commenced (i.e. formal charge, preliminary hearing, indictment, or arraignment). The 6th Amendment also includes the right to have effective assistance of counsel, which includes the effective aid in the preparation and trial of the case. In order to prove ineffective assistance of counsel in violation of the Sixth Amendment, the defendant must show that: (1) his counsel’s performance was deficient; AND (2) but for the counsel’s errors, the result of the trial would have been different. If ineffective assistance of counsel is shown at trial, then the verdict must be reversed and the defendant is entitled to a new trial. 0 exams I. Line-ups & Police-Arranged Identification Procedures ■■ Line-Ups & Police-Arranged Identification Procedures • MED 0 of 24 Exams • Due Process Clause: The Due Process Clause of the 14th Amendment is violated when a line-up is unnecessarily suggestive resulting in a substantial likelihood of misidentification. If there is a violation, the identification is inadmissible at trial. Under the Independent Source Rule, an in-court identification is admissible at trial (even if a lineup identification is tainted) when (1) the witness identified the defendant in-court based on the witness’ previous knowledge, (2) which is trustworthy, AND (3) was obtained by the witness in a previous transaction (usually during the crime). Right to Counsel: Under the 6th Amendment, a person has a right to counsel after being formally charged with a crime that carries a substantial risk of jail time (more than 1 year), which includes a post-charge lineup. However, the attorney cannot dictate how the line-up proceeds, and is instead merely a © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 144 08 CRIMINAL LAW & PROCEDURE • spectator to observe any deficiencies or due process violations to be addressed at trial. A person DOES NOT have a 6th Amendment right to counsel at a pre-charge lineup because the right has not yet attached, as the person has not been formally charged with a crime. Likewise, there is no right to counsel for a photo-identification. Pre-Trial Identifications & the 5th Amendment: Courts have held that pre-trial identifications (lineups, photo identifications), blood tests, fingerprints, and voice identifications are NOT testimonial in nature and fall outside 5th Amendment protection. As such, a suspect in custody after an arrest CANNOT refuse participation in a lineup. J. Exclusionary Rule & the Fruit of the Poisonous Tree Doctrine ■■ Exclusionary Rule & the Fruit of the Poisonous Tree Doctrine • HIGH 2 of 24 Exams • • Under the Exclusionary Rule, evidence obtained in violation of a defendant’s 4th, 5th, or 6th Amendment rights is inadmissible in a criminal case. Additionally, all derivative evidence is inadmissible under the fruit of the poisonous tree doctrine. However, the exclusionary rule DOES NOT apply if: (a) it is shown that the police had an independent source for the secondary evidence (where there is a source for discovery and seizure of the evidence that is distinct from the original illegal source); (b) the discovery of evidence would have been inevitable regardless of the illegality; (c) through the attenuation doctrine (which admits evidence where a defendant’s free will has been restored through the passage of time and/or intervening events); OR (d) the police relied in good faith on a defective search warrant. In addition, there are limitations on the Exclusionary Rule as applied to Miranda violations. o Limitation #1: Failure to give Miranda warnings DOES NOT require suppression of the physical evidence found because of the statements (as long as the statements are voluntary). o Limitation #2: Subsequent statements made after Miranda warnings are admissible, UNLESS a nonMirandized previous statement was obtained through the use of inherently coercive police tactics offensive to due process. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2011, Essay 2 Feb 2008, Essay 8 145 08 CRIMINAL LAW & PROCEDURE o Limitation #3: Statements obtained in violation of a suspect’s Miranda rights are inadmissible in the Prosecution’s case-in-chief. BUT, they may be used to impeach a defendant on cross examination. However, such statements CANNOT be used to impeach the testimony of third-party witnesses. K. Fair Trial and Guilty Pleas ■■ Right to a Jury Trial • MED 1 of 24 Exams The 6th Amendment, as applied to the states through the 14th Amendment, guarantees a criminal defendant the right to a jury trial for offenses where imprisonment may be greater than six months. 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 by the prosecution. A minimum of six jurors are required, and the verdict must be unanimous. However, the Supreme Court has upheld non-unanimous verdicts when the jury panel was much greater than six jurors (i.e. a 12-person jury panel). Feb 2014, Essay 5 ■■ Competence to Stand Trial • MED 1 of 24 Exams • • A defendant is competent to stand trial if he: (1) has sufficient present ability to consult with his lawyer with a reasonable degree of rational understanding (he must be able to assist in preparing his defense); AND (2) has a rational and factual understanding of the proceedings against him. Due process REQUIRES a trial court to conduct a competency hearing, either on motion or sua sponte, if there is sufficient doubt about a defendant’s competence. This obligation exists throughout the trial. After sufficient doubt as to competency arises, the burden of evaluating competency is placed upon the court and court-appointed experts. A criminal defendant cannot be tried if he is deemed incompetent, but competence may be reassessed at a later date if his mental condition improves. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 2 146 08 CRIMINAL LAW & PROCEDURE L. Double Jeopardy ■■ Double Jeopardy • MED 1 of 24 Exams • • • The Double Jeopardy Clause of the 5th Amendment prevents a defendant from being prosecuted twice for the same offense. In a jury trial, jeopardy attaches once the jury is impaneled and sworn. Double jeopardy will bar separate prosecutions of a defendant arising out of the “same offense”. Under the Blockburger test, two distinct crimes DO NOT constitute the “same offense” for double jeopardy purposes if each crime requires proof of a fact which the other does not. However, the following exceptions exist where a defendant can be retried: (1) when the first trial ends in a hung jury; (2) when manifest necessity exists to end the original trial; OR (3) when the original trial is terminated at the defendant’s request and it’s not for an acquittal on the merits. A final judgment on a lesser included 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. Feb 2014, Essay 5 M. Burden of Proof and Persuasion ■■ Burden of Proof, Presumptions, & Sufficiency of Evidence • HIGH 2 of 24 Exams • The prosecution must prove every element of a crime beyond a reasonable doubt. The burden of proof CANNOT be shifted to the defendant under the Due Process Clause. However, a state may impose that affirmative defenses be proved by the defendant (i.e. insanity or selfdefense). A jury instruction that creates a rebuttable presumption for an element of the crime (one that may be disputed or overcome by additional evidence) violates Due Process Clause if it shifts the burden of proof to the defendant. A jury instruction that creates an irrebuttable presumption for an element of the crime (one that cannot be disputed or overcome by additional evidence) is a per se violation of the Due Process Clause. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2014, Essay 5 July 2009, Essay 7 147 08 CRIMINAL LAW & PROCEDURE • After the prosecution closes its case in chief or after the close of all the evidence, the defendant may move for a Judgment of Acquittal. If the evidence is insufficient to sustain a conviction for a crime (when a reasonable jury would not find that each element was proven beyond a reasonable doubt), the court MUST enter Judgment of Acquittal. N. Appeal and Error ■■ Harmless Error Rule • MED 0 of 24 Exams Under the Harmless Error Rule, even if evidence in violation of the defendant’s constitutional rights was improperly admitted at trial, a guilty verdict will stand on appeal if the prosecution can prove that the error was harmless because the defendant would have been convicted even without the tainted evidence. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 148 09 EVIDENCE FRE = Federal Rules of Evidence A. Probative Value ■■ Probative Value: • HIGH 7 of 24 Exams • MEE TIP Relevancy & Rule 403 Exclusions Relevancy: To be admissible, evidence must be relevant. Evidence is relevant if: (1) it has any tendency to make a fact more or less probable than it would be without the evidence; 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: Under FRE 403, 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. Evidence is unfairly prejudicial when the evidence is (1) unnecessary, AND (2) might cause the jury to improperly sympathize or dislike a party. As an alternative to excluding evidence completely under Rule 403, the court could limit the unfair prejudice to a party by limiting the scope of evidence or examination to specific topics. All evidence essay questions must be answered according to the Federal Rules of Evidence. July 2018, Essay 5 July 2017, Essay 5 Feb 2016, Essay 2 July 2014, Essay 5 Feb 2013, Essay 7 Feb 2012, Essay 1 Feb 2010, Essay 7 MEE TIP: When & How to Discuss Relevance If a question asks whether certain evidence is “admissible”, be sure to discuss Relevance. In recent essays, relevancy has been discussed briefly for each item even though relevance wasn’t the primary rule tested. For example, on the July 2018 MEE (Essay 5), Relevance was briefly discussed at the beginning of Point One, Two, Three(a), and Four. For this type of brief analysis: First, state “Evidence is relevant if it has any tendency to make a fact more probable or less probable than it would be without the evidence.” Then, write one sentence on why the evidence is relevant. Remember to state the rule and analysis very briefly (unless a greater analysis of Relevance and the Rule 403 exclusions is warranted). B. Policy Exclusions ■■ Subsequent Remedial Measures • MED 1 of 24 Exams Subsequent remedial measures are measures taken that would have made an earlier injury or harm less likely to occur. Under the FRE, evidence of subsequent remedial measures 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. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2012, Essay 1 149 09 EVIDENCE • However, the court may admit such evidence for other purposes, such as: (i) impeachment; or (ii) to prove a disputed issue as to ownership, control, or feasibility of precautionary measures. ■■ Compromise/Settlement Offers & Negotiations • MED 1 of 24 Exams • Under the FRE, offers to settle claims, offers to compromise, and statements made during settlement negotiations are NOT admissible to: (a) prove the validity or amount of a disputed claim (the claim must be filed or threatened); OR (b) to impeach by a prior inconsistent statement or contradiction. However, the court may admit such evidence for another purpose, such as proving bias/prejudice of a witness, negating a contention of undue delay, or proving obstruction in a criminal matter. Feb 2012, Essay 1 ■■ Pleas & Plea Negotiations • MED 0 of 24 Exams Under the FRE, the following are NOT admissible against a person in a subsequent civil or criminal case: (a) statements made during plea discussions; (b) a nolo contendere plea (a plea where defendant neither admits or disputes a charge); OR (c) a defendant’s guilty plea that was later withdrawn. 0 exams ■■ Offers to Pay Medical Expenses • MED 1 of 24 Exams Under the FRE, evidence of paying or promising/offering to pay medical expenses or bills is NOT admissible to prove liability (even if there is no disputed claim). However, any related statements or factual admissions (other than the offer to pay) ARE ADMISSIBLE. Feb 2012, Essay 1 ■■ Liability Insurance • MED 0 of 24 Exams Evidence of liability insurance is NOT admissible to prove culpability (that a person acted negligently or wrongfully). However, the court may admit such evidence for another purpose, such as proving bias/prejudice of a witness, or proving agency, ownership, or control. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 150 09 EVIDENCE C. Physical and Documentary Evidence ■■ Authentication of Evidence • MED 0 of 24 Exams • • All evidence MUST be authenticated before being admitted into evidence. A party must prove that the item it seeks to admit is actually what the party purports it to be, UNLESS the parties stipulate otherwise. Physical evidence may be authenticated through: (a) witness testimony; OR (b) by evidence that shows it has been held in a substantially unbroken chain of custody. Voice recordings may be authenticated by anyone who has (1) heard the person speak (either first hand or electronically); AND (2) identified the recorded person as the speaker. 0 exams ■■ Best Evidence Rule • MED 0 of 24 Exams Under the FRE, the original writing, recording, or photograph is required in order to prove its content UNLESS: (a) it is a reliable duplicate (a photocopy is allowed, but not a handwritten copy); (b) all the originals are lost or destroyed, and not by the proponent acting in bad faith; (c) an original cannot be obtained by any available 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 is not closely related to a controlling issue. D. Character Evidence & Related Concepts ■■ Character Evidence • HIGH 4 of 24 Exams • Generally, evidence of a person’s character is NOT admissible to show propensity (that on a particular occasion the person acted in conformity with the character trait). HOWEVER, character evidence is generally admissible for any non-propensity purpose, such as when character is an ultimate issue in a case (i.e. defamation). Notwithstanding the above, character evidence may be offered as circumstantial evidence to prove propensity in certain limited circumstances: 0 exams MEE TIP On an essay question involving character evidence: First, state the general rule that evidence to prove propensity is not allowed (and that evidence for non-propensity purposes is allowed). Second, apply the applicable character rules for the type of case (sex crime, homicide, civil case) and which party (defendant, prosecution) is offering the evidence. Third, analyze the method the offering party uses to prove character (if relevant to the essay question). Feb 2016, Essay 2 Feb 2012, Essay 1 Feb 2011, Essay 2 Feb 2010, Essay 7 © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 151 09 EVIDENCE o o o o o Defendant’s Character: In criminal cases, a defendant may always introduce evidence of his own character. The prosecution is NOT allowed to present evidence of the defendant’s character to prove propensity UNLESS the defendant first presents evidence of his own character (the defendant “opens the door”). Victim’s Character: Except in cases involving rape, a defendant may offer evidence of the victim’s character to prove the defendant’s innocence. If the defendant presents such evidence, the prosecution may present evidence of the: (a) victim’s good character for the same trait; or (b) defendant’s bad character for the same trait. In a Homicide Case, the prosecution may offer evidence of the victim’s character for peacefulness ONLY IF the defendant claims the victim was the aggressor (self-defense). For Sex-Offense Cases involving alleged sexual misconduct, evidence offered to prove a victim’s sexual behavior or predisposition is generally NOT admissible. However, certain exceptions to this rule exist.  In a civil case, the court may admit evidence offered to prove a victim’s sexual behavior or predisposition if its probative value substantially outweighs the danger of (1) harm to any victim, and (2) unfair prejudice to any party. The court may admit evidence of a victim’s reputation only if the victim has placed it in controversy.  In a criminal case, the court may admit: (a) evidence of specific instances of a victim’s sexual behavior if offered to prove that the defendant was not involved in the sex crime; (b) evidence of sexual relations between the defendant and victim if offered (i) by the defendant to prove consent, or (ii) by the prosecutor for any reason; and (c) evidence whose exclusion would violate the defendant’s constitutional rights. Civil Cases: Character evidence CANNOT be introduced in a civil case to prove propensity, unless the exception for sex-offense cases applies (see above). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 152 09 EVIDENCE • Methods of Proving Character: Under the FRE, when character evidence is admissible, it may be proven in the following ways: (1) on direct examination by opinion testimony or testimony of reputation in the community; OR (2) on cross examination of the character witness by opinion, reputation, or specific acts. “Community” includes groups of associates where one lives, works, or regularly socializes. If a person’s character is an essential element of a charge, claim, or defense, it may also be proven by specific instances of the person’s conduct. ■■ Prior Bad Acts • MED 1 of 24 Exams • • Evidence of prior bad acts (crimes, wrongs, or acts) is NOT admissible to show propensity (that on a particular occasion the person acted in conformity with a character trait). However, evidence of prior bad acts may be admissible for other relevant non-propensity purposes, such as proving Motive, Identity, Absence of Mistake or Accident, Intent, a Common Plan or Scheme, Opportunity, or Preparation. In order to offer such evidence, the proponent must show: (1) by a preponderance of the evidence that the prior act was committed (vague references to acts are insufficient); AND (2) that its probative value substantially outweighs the danger of unfair prejudice. If relevant, a defendant’s prior acts of sexual assault or child molestation are admissible in a case where he is accused of similar conduct. Feb 2016, Essay 2 ■■ Habit or Routine Practice • HIGH 2 of 24 Exams • Evidence of a person’s habit or an organization’s routine practice may be admitted to prove that on a particular occasion the party acted in accordance with the habit or routine practice. The court may admit this evidence regardless of whether it is corroborated or if there was an eyewitness. A habit is a regular response to a repeated situation (i.e. going down a stairway two stairs at a time), and usually has four key elements: (1) specificity; (2) repetition; (3) duration; AND (4) is semi-automatic or reflexive. Usually, courts limit habit evidence to behaviors that are semiautomatic or reflexive. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2018, Essay 5 Feb 2010, Essay 7 153 09 EVIDENCE E. Impeachment ■■ Impeachment: • MED 1 of 24 Exams • Prior inconsistent statements are admissible to impeach a witness’s trial testimony. A party DOES NOT need to show or disclose the contents of the prior statement when examining a witness on it, but must (on request) show it or disclose its contents to the adverse party’s attorney. Extrinsic evidence is admissible only if: (1) relevant to a material issue at trial (one other than the witness’s credibility); AND (2) a proper foundation is shown – (i) the witness is first given an opportunity to explain or deny the statement, and (ii) the adverse party is given an opportunity to examine the witness about it. HOWEVER, the above limitation on extrinsic evidence is not applicable to statements by a party opponent. ■■ Impeachment: • MED 1 of 24 Exams • Prior Inconsistent Statements Feb 2011, Essay 2 Prior Convictions Under the FRE, evidence of prior convictions may be admitted to attack a witness’s character for truthfulness in certain instances. o Prior felony or misdemeanor convictions involving dishonesty (a dishonest act or false statement) are ALWAYS admissible to impeach a witness (the judge has no discretion to exclude it). All other misdemeanors are NOT admissible to impeach. o Felonies that DO NOT involve dishonesty are admissible in the following cases: (1) in a civil or criminal case where the witness is not a defendant (subject to the FRE 403 exclusions); and (2) in a criminal case where the witness is a defendant, but only if the probative value outweighs its prejudicial effect. Sex crimes are generally not considered relevant to credibility (especially when the danger of unfair prejudice is high), but drug convictions have been deemed relevant. o Notwithstanding the above, if 10-years have passed since the later of the witness’s conviction or release from confinement, evidence of the conviction is admissible only if: (1) its probative value substantially outweighs its prejudicial effect; and (2) the proponent gives an adverse party reasonable written notice of the intent to use it. Evidence of a conviction is NOT admissible if it has been pardoned or annulled based on a finding of innocence. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2014, Essay 5 154 09 EVIDENCE ■■ Impeachment: • HIGH 2 of 24 Exams • A witness’s credibility may be attacked on cross-examination by questioning him with specific instances of conduct (i.e. prior bad acts) ONLY IF the conduct is probative of the witness’s character for truthfulness or untruthfulness. However, extrinsic evidence is NEVER admissible to attack or support such instances of a witness’s credibility. Even if a witness lies or denies a specific instance of conduct, he CANNOT be contradicted by extrinsic evidence, such as documentary evidence or by testimony of another witness to show that the witness is lying. ■■ Impeachment: • MED 0 of 24 Exams Specific Instances of Conduct July 2014, Essay 5 Feb 2009, Essay 2 Character for Truthfulness A witness’s credibility may be attacked or supported by: (a) reputation testimony about the witness’s character for truthfulness or untruthfulness in the community; OR (b) by opinion testimony about the witness’s character. HOWEVER, evidence of the witness’s truthful character is admissible only after the witness’s character for truthfulness has been attacked. 0 exams ■■ Impeachment: Ability to Observe, Remember, or Relate Accurately • MED 1 of 24 Exams A witness’s ability to observe, remember, or relate facts accurately may be attacked on impeachment. A witness may be impeached on these issues on cross-examination or with extrinsic evidence. The cross-examiner is permitted to delve into the witness’s story to test the witness’s perceptions and memory. ■■ Impeachment: • MED 1 of 24 Exams Feb 2010, Essay 7 Hearsay Declarants When a hearsay statement has been admitted into evidence, the declarant’s credibility may be attacked (and then supported) by any evidence that would be admissible if the declarant had testified as a witness. The court may admit any evidence of the declarant’s inconsistent statement or conduct, including statements that would otherwise be hearsay. It DOES NOT matter when the statement occurred or whether the declarant had an opportunity to explain or deny it. The party against whom the statement was admitted may call the declarant as a witness, and cross-examine the declarant on the statement. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2008, Essay 4 155 09 EVIDENCE F. Presentation of Evidence ■■ Refreshing Recollection • HIGH 2 of 24 Exams Under the FRE, refreshing a witness’s recollection using a document is permitted when (1) the witness once had personal knowledge of the matter, (2) but is unable to recall the matter while testifying. When refreshing recollection, the witness will be able to read the document. However, only the opposing party may offer the document into evidence if it is otherwise inadmissible (but it may be admitted by the offering party if admissible under another ground, such as a recorded recollection). The opposing party is also entitled to have the document produced at the hearing/trial, to inspect it, and to cross-examine the witness about it. July 2016, Essay 2 Feb 2009, Essay 2 ■■ Judicial Notice • MED 0 of 24 Exams • A court may take judicial notice of indisputable facts that are either: (a) commonly known in the community; OR (b) readily capable of verification and cannot reasonably be questioned. The court may take judicial notice at any stage of the proceeding. In a civil case, the court must instruct the jury to accept the noticed fact as conclusive. In a criminal case, the court must instruct the jury that it may or may not accept the noticed fact as conclusive. 0 exams ■■ Lay Witness Testimony & Opinions • HIGH 3 of 24 Exams • A lay witness is any person who gives testimony in a case that is NOT called as an expert. A lay witness’s testimony is admissible if he is competent to testify. Under the FRE, competency is presumed unless the FRE provides otherwise. Before testifying, the witness must take an oath to tell the truth. Additionally, a witness may only testify as to matters that he has personal knowledge. Lay witness identification, based on the witness’ prior familiarity with a voice, is allowed at trial. A lay witness may only offer an opinion if it is: (1) rationally based on the witness’s perception; (2) helpful to clearly understand the witness’s testimony or to determine a fact in issue (legal conclusions are not helpful); AND (3) not based on scientific, technical, or other specialized knowledge. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2018, Essay 5 Feb 2016, Essay 2 Feb 2010, Essay 7 156 09 EVIDENCE ■■ Expert Witness Testimony • MED 1 of 24 Exams • Expert testimony is permitted when: (1) the witness is qualified as an expert; (2) the opinion is helpful to the jury (if an average jury could not figure the issue out for themselves); (3) the witness believes in the opinion to a reasonable degree of certainty; (4) the opinion is supported by sufficient facts or data (i.e. documentary evidence, personal knowledge, examination); AND (5) the opinion is based on reliable principles and methods that were reliably applied. Reliability is based on the methodology’s: (1) publication and peer review; (2) error rate; (3) testability; AND (4) whether it is generally accepted in the field. Opinion on an Ultimate Issue: Generally, an opinion is NOT objectionable just because it embraces an ultimate issue. However, in a criminal case, an expert witness CANNOT state an opinion about whether the defendant had the requisite mental state that is an element of the crime or a defense. July 2018, Essay 5 G. Hearsay ■■ Hearsay, Multiple Hearsay, & Non-Hearsay • HIGH 8 of 24 Exams • • Hearsay Definition: Hearsay is (1) an out-of-court statement, (2) that is offered to prove the truth of the matter asserted. Hearsay is ONLY admissible if it falls under an exception. A “statement” means a person’s oral assertion, written assertion, or nonverbal conduct, if the person intended it as an assertion. However, if the act DOES NOT assert or communicate anything (i.e. crying), it is not deemed a statement for hearsay purposes. Multiple Hearsay: When evidence contains hearsay within hearsay (multiple or double hearsay), each level of hearsay must fall within an exception to be admissible. Non-Hearsay: If an out-of-court statement is offered to prove something other than the truth of the statement, it is non-hearsay and is ADMISSIBLE. Common non-hearsay statements include: (1) verbal acts of independent legal significance; (2) statements offered to show the effect on the listener; (3) a prior inconsistent statement used to impeach; and (4) circumstantial evidence of the speaker’s state of mind. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2018, Essay 5 July 2017, Essay 5 July 2016, Essay 2 Feb 2016, Essay 2 July 2013, Essay 4 Feb 2013, Essay 7 Feb 2011, Essay 2 Feb 2008, Essay 4 157 09 EVIDENCE ■■ Hearsay Exclusion: • HIGH 4 of 24 Exams Under the FRE, statements by a party opponent are deemed to be non-hearsay. A statement by a party opponent is (1) any statement offered against an opposing party, (2) that either: (a) was made by the party in an individual or representative capacity; (b) is adopted or believed to be true by the party (silence may be sufficient if a reasonable person would have denied the statement after hearing it); (c) was made by an person authorized to make a statement on the subject; (d) was made by the party’s agent or employee on a matter within the scope of that relationship; OR (e) was made by the party’s co-conspirator during and in furtherance of the conspiracy. ■■ Hearsay Exclusion: • HIGH 2 of 24 Exams HIGH 4 of 24 Exams • HIGH 3 of 24 Exams July 2017, Essay 5 July 2016, Essay 2 Feb 2012, Essay 1 The rule of Statements by a Party Opponent was mentioned in the “Note” section of Feb 2012 MEE (Essay 1, Point Two), but it was not the primary issue tested. Feb 2016, Essay 2 Feb 2011, Essay 2 Present Sense Impression Present sense impression is an exception to the hearsay rule. A 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 within the period contemplated under this hearsay exception. ■■ Hearsay Exception: July 2018, Essay 5 Prior Statements by a Witness Under the FRE, prior statements by a declarant-witness are deemed to be non-hearsay if: (1) the declarant testifies; (2) the declarant is subject to cross-examination about a prior statement; AND (3) the prior statement: (a) was inconsistent with the declarant’s testimony and was given under penalty of perjury at a court proceeding or deposition; (b) identifies a person as someone the declarant perceived earlier (statements identifying a person after hearing that person’s voice typically qualify under this rule); or (c) is consistent with the declarant’s testimony and is offered to either (i) rebut that the declarant is lying or (ii) to rehabilitate the declarant’s credibility as a witness when attacked on another ground. ■■ Hearsay Exception: • Statements by a Party Opponent July 2017, Essay 5 Feb 2016, Essay 2 July 2013, Essay 4 Feb 2013, Essay 7 Excited Utterance An excited utterance is an exception to the hearsay rule. An excited utterance is a statement (1) relating to a startling event or condition, (2) made while the declarant was under the stress of excitement that the event/condition caused. There can be a slight delay between the event and the statement. Responding to a question usually has no effect on the applicability of this hearsay exception, unless police questioning was suggestive. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 5 Feb 2016, Essay 2 July 2013, Essay 4 158 09 EVIDENCE ■■ Hearsay Exception: • HIGH 3 of 24 Exams Business records are an exception to the hearsay rule. A business record is admissible if it is: (1) a record of events, conditions, opinions, or 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 of the matter; (5) is the regular practice of the business to make such a record; AND (6) the opponent party does not show that the record was made under circumstances indicating a lack of trustworthiness. The witness who lays the business records foundation DOES NOT need be the author of the record or attest to its accuracy. ■■ Hearsay Exception: Treatment • HIGH 3 of 24 Exams Physical Condition MED 0 of 24 Exams • MED 0 of 24 Exams • Feb 2008, Essay 4 July 2018, Essay 5 July 2013, Essay 4 Feb 2008, Essay 4 Statements of Mental, Emotional, or Statements of the declarant’s then-existing state of mind (i.e. motive, intent, or plan) OR emotional, sensory, or physical condition are an exception to the hearsay rule. However, statements of memory or belief offered to prove a fact remembered/believed is NOT admissible UNLESS it relates to the validity or terms of the declarant’s will. ■■ Hearsay Exception: July 2018, Essay 5 Feb 2013, Essay 7 Statements Made for Medical Diagnosis/ A statement is 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 not relevant to medical diagnosis or treatment (i.e. statements of fault) generally DO NOT fall within this hearsay exception. ■■ Hearsay Exception: • Business Records 0 exams Dying Declaration A dying declaration is an exception to the hearsay rule. Under the FRE, a dying declaration MAY ONLY be used in either: (a) a civil case; OR (b) a criminal homicide case. In order to be admissible: (1) the declarant must be unavailable; (2) the statement was made under a sense of impending death; AND (3) the statement was about the circumstances or cause that put the declarant in the position of impending death. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 159 09 EVIDENCE • A declarant is deemed unavailable as a witness if he: (a) is exempted from testifying due to privilege; (b) refuses to testify despite a court order to do so; (c) testifies that he does not remember the subject matter; (d) cannot be present to testify because of death or illness; OR (e) is beyond the reach of a court’s subpoena, and his attendance cannot be procured by reasonable means. ■■ Hearsay Exception: • MED 0 of 24 Exams • A statement made against one’s own penal, proprietary, or pecuniary interest is an exception to the hearsay rule, and is admissible when the declarant is unavailable. If a statement against interest is offered in a criminal case, it MUST be supported by corroborating circumstances that clearly indicate its trustworthiness. A declarant is deemed unavailable as a witness if he: (a) is exempted from testifying due to privilege; (b) refuses to testify despite a court order to do so; (c) testifies that he does not remember the subject matter; (d) cannot be present to testify because of death or illness; OR (e) is beyond the reach of a court’s subpoena, and his attendance cannot be procured by reasonable means. ■■ Hearsay Exception: • MED 0 of 24 Exams MED 1 of 24 Exams 0 exams Public Records Under the FRE, the following records are admissible under the government or public records hearsay exception: (1) a record describing the policies and practices of a public office; (2) observations made by someone in accordance with his duties by law (except police reports in criminal cases); and (3) factual findings from a legally authorized investigation (but are only admissible in civil cases or against the government in criminal cases). HOWEVER, if the opposing party shows that the record was made under circumstances indicating a lack of trustworthiness, the record will NOT be admitted. ■■ Hearsay Exception: • Statement Against Interest 0 exams The Public Records Exception was mentioned in the “Note” section of the July 2016 MEE (Essay 2, Point Three), but was not the issue tested because it was inapplicable to the fact pattern. Past Recollection Recorded A 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. A past recollection recorded is an exception to the hearsay rule, and is admissible if: (1) the witness had personal knowledge of the events at one time; (2) the writing was made or adopted by the witness; (3) the writing was made while the events were © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 2 160 09 EVIDENCE still fresh in the mind of the witness; (4) the writing is accurate; AND (5) the witness can no longer remember the event. If admitted, the record MAY be read into evidence. However, the record MAY ONLY be received as an exhibit if it is offered by an adverse party. ■■ Sixth Amendment Right to Confront Witnesses • HIGH 2 of 24 Exams • • The Sixth Amendment’s Confrontation Clause (as applied to the states via the Fourteenth Amendment) gives a criminal defendant the right to confront witnesses against him. The use of an out-of-court statement (even if it falls within a hearsay exception or exemption) violates a defendant’s Sixth Amendment rights when: (1) the statement is “testimonial”; (2) the declarant is unavailable to be crossexamined at trial; AND (3) the defendant did not have an opportunity to cross-examine the declarant before trial. This prohibition is subject to some exceptions, such as dying declarations and wrongdoing by the defendant. Courts have held that the following statements are testimonial in nature: (a) statements made to grand juries (and in other similar situations); and (b) statements made to the police whose primary purpose (when viewed objectively) is to collect testimony to be used at a later trial. HOWEVER, statements made to the police where the primary purpose of the questioning was to assist the police in an ongoing emergency are NOT considered testimonial. The U.S. Supreme Court set forth the following factors to determine the existence of an ongoing emergency: (1) the nature of the dispute; (2) the scope of the potential harm to the victim; (3) the threat to additional identifiable victims; (4) the existence of a more generalized threat to the public; (5) the suspect’s type of weapon; and (6) whether the suspect remained “at large” or had been located, but not apprehended. Feb 2016, Essay 2 July 2013, Essay 4 H. Privileges ■■ Spousal Privileges: Communications • MED 1 of 24 Exams Spousal Immunity & Confidential Marital Spousal Immunity: A witness-spouse in a valid marriage may refuse to testify against his or her spouse in a criminal case (even if the spouse is not a defendant). The witnessspouse alone holds the privilege, and the privilege ends after divorce. Spousal immunity DOES NOT apply in civil cases. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2008, Essay 4 161 09 EVIDENCE • • Confidential Marital Communications: Communications between a husband and wife are privileged in both civil and criminal cases if: (1) made during the course of a valid marriage; AND (2) were intended to be confidential. The privilege is held by both spouses (either may assert it), and applies even after divorce. If a spouse divulges the content of communications to a third-party, the privilege for those disclosed communications no longer applies. Both spousal immunity and the privilege for confidential marital communications DO NOT apply: (a) in cases between the spouses; OR (b) when a spouse commits a crime against the other spouse or their children. ■■ Attorney-Client Privilege • MED 0 of 24 Exams • • The attorney-client privilege protects confidential communications between an attorney and client from disclosure if: (1) the communication was confidential (it was not knowingly made in front of third-parties); AND (2) the communication was made to facilitate legal services. Such communications remain privileged even after the client dies. The client holds the privilege and may waive it at any time, including by disclosure to a third party. However, privilege is NOT waived through inadvertent disclosure to a third party. The privilege DOES NOT apply when: (a) legal services are sought to further a crime or fraud; (b) there is litigation related to a breach of duty between the attorney and client; OR (c) jointly represented clients are subsequently involved in civil litigation against each other. 0 exams ■■ Attorney Work Product Doctrine • MED 0 of 24 Exams The work product doctrine protects ALL materials prepared by an attorney or his agents in anticipation of or during litigation. Such materials are protected from disclosure UNLESS a party can show: (1) a substantial need for the materials exist; AND (2) a substantial equivalent of the materials cannot be obtained without undue hardship. 0 exams ■■ Physician-Patient Privilege • MED 1 of 24 Exams Most states recognize a Physician-Patient Privilege. In those States, confidential patient communications made to a physician for the purpose of medical diagnosis or treatment ARE PRIVILEGED. The patient holds the privilege (not the physician), and only the patient can invoke or waive it. The privilege may be waived by the patient when the medical condition is placed “in issue” (i.e. a personal injury lawsuit relating to the condition). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2018, Essay 5 162 09 EVIDENCE • Federal courts DO NOT recognize a Physician-Patient Privilege. However, under the FRE, state law governs privilege for civil cases regarding a claim or defense for which state law supplies the rule of decision. ■■ Psychotherapist-Patient Privilege • MED 0 of 24 Exams • All states recognize a Psychotherapist-Patient 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 (not the psychotherapist), and only the patient can invoke or waive it. Exceptions to the privilege are based on state and federal law, and include: (i) court-ordered examinations; (ii) civil commitment proceedings to determine if hospitalization is required; (iii) when the psychological condition is placed “in issue” by the patient (i.e. a personal injury lawsuit relating to the condition); and (iv) the dangerous-patient exception – the therapist has a duty to warn when he knows (or reasonably should know) that the patient poses a serious threat of violence to foreseeable victims. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 163 10 FAMILY LAW UMDA = Uniform Marriage and Divorce Act UPAA = Uniform Premarital Agreement Act PKPA = Parental Kidnapping Prevention Act UCCJEA = Uniform Child Custody Jurisdiction and Enforcement Act A. Getting Married ■■ Marriage Requirements (State of Mind & Procedural) • LOW 1 of 49 Exams • A valid marriage requires: (1) consent from both parties; (2) a marriage license; AND (3) that the marriage is solemnized in a ceremony by a judicial officer or church. Courts interpret the consent requirement differently. Some courts find consent if the parties participate in a marriage ceremony and sought some benefits of marriage. While other courts find consent only if the parties consented to the obligations of marriage. July 1997, Essay 4 ■■ Common Law Marriage • HIGH 5 of 49 Exams • A valid common law marriage creates marital rights and obligations identical to a ceremonial marriage. A common law marriage generally 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 the two parties are married; AND (4) hold themselves out as being married. Once formed, a common law marriage can only be dissolved through divorce or annulment. Most states will honor a valid common law marriage established in another state (even if not recognized within the state). However, a court may refuse to honor a common law marriage when the spouses and the marriage have limited contacts to the state where the common law marriage was allegedly established. Feb 2017, Essay 3 July 2011, Essay 6 July 2006, Essay 4 July 1999, Essay 4 July 1995, Essay 5 ■■ Bigamous Marriage • MED 3 of 49 Exams • A person CANNOT be married to more than one person at the same time. Thus, a marriage is NOT valid if entered into when one of the parties is still married (i.e. before the dissolution of an earlier marriage). However, a bigamous marriage (when a person is married to more than one person at the same time) may be saved under either: (a) the equity doctrine; OR (b) the Uniform Marriage and Divorce Act (UMDA). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 3 Feb 2006, Essay 4 July 1995, Essay 5 164 10 FAMILY LAW o o The equity doctrine creates a strong presumption that the most recent marriage is valid. But, this presumption may be rebutted with strong evidence that shows that the first marriage was not dissolved (i.e. court documents showing no record of divorce). If the presumption is rebutted, the second marriage is invalid. Under the UMDA, an invalid marriage may be validated upon the removal of the impediment (i.e. an earlier marriage is terminated or a spouse gains capacity). In such instance, the marriage becomes valid as of the date the impediment is removed. B. Premarital Agreements ■■ Premarital Agreements: • HIGH 6 of 49 Exams • • Enforceability Premarital agreements are contractual agreements that are executed by the spouses prior to the marriage. Generally, such agreements are enforceable UNLESS procured by fraud, duress, or coercion. Under the Uniform Premarital Agreement Act (UPAA), a premarital agreement MUST be: (1) in writing; AND (2) signed by both parties. The agreement is enforceable even without consideration. o Under the UPAA, a premarital agreement is NOT ENFORCEABLE if the spouse against whom enforcement is sought proves that: (a) the agreement was made involuntarily; OR (b) it was unconscionable when executed and before execution the spouse was (i) not provided fair disclosure of the property and financial obligations of the other spouse; (ii) did not waive disclosure in writing; and (iii) did not have (or reasonably could have had) knowledge of such information. To determine if a premarital agreement was made voluntarily, courts look to whether there is fraud, duress, or coercion. Factors a court will typically consider include: (1) the presence of independent legal counsel; (2) the length of time between the date of the agreement and the wedding; (3) the party’s abilities to understand the agreement; and (4) other reasons for proceeding with the marriage, such as pregnancy or financial loss and embarrassment from cancelling the wedding. A party’s insistence on signing the agreement as a condition of marriage by itself DOES NOT render the agreement involuntary. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 1 Feb 2016, Essay 6 July 2010, Essay 6 July 2008, Essay 7 July 2003, Essay 6 July 1998, Essay 5 165 10 FAMILY LAW ■■ Premarital Agreements: • HIGH 6 of 49 Exams Provisions in a marital agreement regarding child support or child custody are NOT binding on a court, and any provision that adversely affects a child’s right to support is unenforceable. If the court decides a premarital agreement regarding child support is not in the best interests of the child, the court may order one or both parents to pay an amount reasonable or necessary for the child’s support. ■■ Premarital Agreements: • MED 2 of 49 Exams • Child Custody & Support Feb 2018, Essay 1 Feb 2009, Essay 8 July 2008, Essay 7 July 2003, Essay 6 July 1998, Essay 5 Feb 1995, Essay 2 Spousal Support Under the Uniform Premarital Agreement Act (UPAA), modification or elimination of spousal support by a premarital agreement is permitted, BUT such provisions will NOT be enforced if doing so would make the spouse eligible for public support (i.e. welfare). A court may order a spouse to provide support to the extent necessary to avoid such eligibility. In some jurisdictions provisions modifying or eliminating spousal support are invalid because they are against public policy. July 2010, Essay 6 July 1998, Essay 5 ■■ Premarital Agreements: Eliminating Fundamental Marital Duties & Allocating Financial Responsibilities • LOW • 1 of 49 Exams Spouses may agree to any matter (including their personal rights and obligations) that is NOT in violation of (a) public policy, or (b) criminal law. Spouses may agree to allocate financial responsibilities, BUT such agreements are NOT binding on third-parties. In addition, agreements to limit a spouse’s support during marriage are generally void as against public policy. July 1997, Essay 4 C. Being Married ■■ Rights & Responsibilities of Spouses: Property Acts • LOW 1 of 49 Exams Married Women’s Under the common law, a woman would lose all of her property rights upon marriage. However, ALL states have abolished such laws. Under the Married Women’s Property Act, a woman retains full rights to her property after marriage. A married woman may manage her property as she sees fit, and her decisions are not subject to judicial review or control. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2013, Essay 3 166 10 FAMILY LAW ■■ Rights & Responsibilities of Spouses: • MED 2 of 49 Exams Payment for Necessities In most states, spouses are liable to a creditor who has provided necessities to the other spouse (i.e. food, clothing, shelter). Whether medical expenses are considered necessities depends on the law of the state. In the states where medical expenses are deemed necessities, a non-debtor spouse is only liable to the extent the debtor spouse is unable to pay. July 2013, Essay 3 July 1997, Essay 4 D. Jurisdiction & Recognition of Decrees in Marital Actions ■■ Jurisdiction: • HIGH 8 of 49 Exams • • • Marital/Divorce & Support Actions State courts have subject matter jurisdiction over marital actions (divorce, annulment, child custody and support, spousal support). An ex parte divorce (a divorce action where only one of the spouses is before the court) may be maintained without personal jurisdiction over the absentee spouse, if the plaintiffspouse is a domiciliary of the rendering state. Many states have a durational residency requirement, which specifies a set time before a spouse can bring a divorce action. The plaintiff-spouse’s status as a domiciliary gives the court subject matter jurisdiction over the marital res (the marriage itself). A divorce (whether ex parte or bilateral) validly granted in another state is entitled to full faith and credit in other states. In a matrimonial action involving economic or child custody/support issues (i.e. alimony, property distribution, child support and custody) the court MUST have personal jurisdiction over the defendant-spouse, in order for the judgment to be entitled to full faith and credit. A divisible divorce allows one party to terminate the marriage in one proceeding and reserve other issues (i.e. property division and spousal support) for a later proceeding. A divisible divorce can occur when a court has subject matter jurisdiction over the marriage (the res) to maintain a divorce action, but not personal jurisdiction over the defendant spouse to maintain an action for economic or child custody/support issues. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2014, Essay 3 July 2009, Essay 3 Feb 2009, Essay 8 Feb 2007, Essay 4 Feb 2003, Essay 3 July 2001, Essay 5 Feb 2000, Essay 5 Feb 1996, Essay 3 167 10 FAMILY LAW ■■ Jurisdiction: • HIGH 5 of 49 Exams • • • Child Custody & Adoption Matters In a matrimonial action involving child custody issues, the court MUST have personal jurisdiction over the defendantspouse in order for the judgment to be entitled to full faith and credit. Under the Parental Kidnapping Prevention Act (PKPA), a court may decide custody only if it exercises one of the following: o Home State Jurisdiction: When it is the child’s home state or where the child lived with a parent for at least 6 months immediately before the custody action was filed. o Significant Connection Jurisdiction: When (1) there is no home state; AND (2) the child and at least one parent have a significant connection with the state. Substantial evidence in the state must exist concerning the child’s care, protection, training, and personal relationships. o Emergency Jurisdiction: When the child (1) is physically present in the state; AND (2) has been abandoned or it’s necessary in an emergency to protect the child. o More Appropriate Forum Jurisdiction: When no other state has home state, significant connection, continuing, or emergency jurisdiction. The Uniform Child Custody Jurisdiction and Enforcement Act (UCCJEA) generally provides the same requirements as the PKPA. The main difference between the two is the prerequisite for exercising Significant Connect Jurisdiction, in which the UCCJEA provides that a court has jurisdiction when: (a) there is no home state; OR (b) the home state has declined to exercise jurisdiction because the current state is the more appropriate forum. Adoption Matters: In most states, the jurisdiction for a court to enter an adoption decree is the same as required for a child custody determination under the UCCJEA. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2012, Essay 4 July 2011, Essay 6 Feb 2003, Essay 3 Feb 1999, Essay 5 Feb 1996, Essay 3 168 10 FAMILY LAW E. Divorce, Annulment, Separation, & Dissolution ■■ Annulment • LOW 1 of 49 Exams • An annulment invalidates a marriage, which treats the marriage as if it did not happen. For a court to grant an annulment, a spouse must establish one of the following grounds: (a) lack of capacity (fraud, duress, mental incapacity); (b) bigamy (one spouse is already married); (c) consanguinity (marriage between close family members); OR (d) a spouse who is underage at the time of marriage (the marriage is voidable by the underage spouse). An annulment by wrongfully obtaining consent to marry by fraud exists when (1) a spouse made misrepresentations prior to the marriage concerning an essential and vital part of the marriage, AND (2) had the other spouse been made aware of this, the marriage would not have been consented to. o Sex and procreation constitute essential and vital parts of the marriage. However, an annulment action for fraud DOES NOT lie if a spouse simply changes his or her mind after the marriage. A party may be deemed to have waived this ground for an annulment if the spouse continues to cohabitate with the other spouse after discovering the facts which underlie the fraud. Courts usually do not grant annulments for misrepresentations concerning a spouse’s character or financial situation. Feb 2006, Essay 4 ■■ Divorce Grounds • MED 2 of 49 Exams • In most states, there are five grounds for divorce: (1) cruel and inhuman treatment; (2) adultery; (3) abandonment for a set amount of time (set by statute); (4) habitual drug addiction or drunkenness; and (5) a “no-fault” divorce (irretrievable breakdown). To procure a “no-fault” divorce, a party MUST show that (1) the relationship between the spouses has irretrievably broken down, (2) for set amount of time depending on the state’s statute (i.e. at least 6 months). The only defense to a no-fault divorce is if one of the above elements is not met. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2010, Essay 3 Feb 2007, Essay 4 169 10 FAMILY LAW ■■ Setting Aside Separation & Divorce Settlement Agreements • MED • 3 of 49 Exams • A separation agreement is invalid if it: (a) is unconscionable; OR (b) was the result of fraud. A divorce settlement agreement may be set aside if it is: (1) substantially unfair; AND (2) the result of fraud by the spouse or mediator misconduct. A settlement agreement may be set aside for mediator misconduct, including the mediator’s failure to: (a) be impartial; (b) disclose conflicts; OR (c) fully inform the participants about the law and their rights. Feb 2011, Essay 5 Feb 2010, Essay 3 July 2007, Essay 3 F. Division of Property ■■ Division of Property: • HIGH 9 of 49 Exams • • • Marital vs. Separate Property In all states, a divorce court may divide property without regard to which spouse has title to the property. Most states follow the equitable division of marital property approach, in which marital assets are to be divided by equitable distribution among the parties to a divorce. Other states apply either a community property or common law approach. Notwithstanding the approach applied, in almost all jurisdictions, a court CANNOT divide separate property. In a divorce, a court will divide all property owned by the two spouses into two categories: (1) the separate property of each spouse; and (2) marital property owned jointly between the spouses. Separate property includes (a) property and assets acquired by each individual spouse before marriage, (b) gifts and bequests to each spouse as an individual during marriage, (c) property which the spouses agree will be separate property, and (d) passive appreciation of assets in any of the above categories. Passive appreciation is appreciation in value due merely to the passage of time, and not to the efforts of either spouse. Marital property includes all other property acquired during the marriage, regardless of whose name is on the title of the property. In most states, marital property also includes the active appreciation of separate property. Active appreciation includes appreciation caused by the effort of one or both spouses. Future expectancies (even contingent expectancies) created during the marriage are still deemed to be marital property, even if payment will not be received until after the marriage ends. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 1 Feb 2017, Essay 3 Feb 2016, Essay 6 July 2010, Essay 6 July 2008, Essay 7 Feb 2007, Essay 4 Feb 2004, Essay 3 July 2003, Essay 6 Feb 1998, Essay 5 170 10 FAMILY LAW • • Each spouse’s separate property will NOT be subject to equitable division. A court will pool all marital property and distribute that property between the two spouses. In distributing marital property, the court will look at factors such as the duration of the marriage, age of the spouses, earning capacity, lifestyle, income of the spouses, and the property which was deemed separate property. In addition, the services provided by one spouse who stayed home or put a career on hold will be considered in order to reach an equitable division. Some states will distribute property equally between the primary breadwinner and primary homemaker. Generally, the fault of either party is irrelevant to the division of marital property. In some states, property acquired is no longer marital property once the spouses are permanently separated. However, other states require a final divorce decree to end the accrual of marital property. ■■ Division of Property: • MED 2 of 49 Exams • In most states professional degrees or licenses are NOT deemed marital property subject to equitable division. However, these states will generally require reimbursement for any support provided by a spouse that contributed to the other spouse’s education or licensing. A minority of states consider professional degrees or licenses to be marital property subject to division at divorce. In these states, the value of the degree is based on potential future earnings. ■■ Division of Property: • MED 2 of 49 Exams LOW 1 of 49 Exams Feb 2010, Essay 3 Feb 1995, Essay 2 Marital & Economic Fault In most states, the marital fault of either party (i.e. adultery) is irrelevant to distributions of marital property. However, most courts will consider the economic misconduct (i.e. dissipation of assets) of a spouse when dividing property, even in a “no fault” jurisdiction. Dissipation of assets occurs when, during the breakdown of the marriage, a spouse uses marital property for the sole benefit of himself for a purpose unrelated to the marriage. ■■ Division of Property: • Professional License or Degree Feb 2010, Essay 3 Feb 2004, Essay 3 No Termination Upon Death A court ordered award for division of property DOES NOT terminate upon the death of the obligor spouse. Such obligations may be enforced against the deceased spouse’s estate. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 1997, Essay 7 171 10 FAMILY LAW ■■ Modification of a Property Division Award • MED 2 of 49 Exams A property division award CANNOT be modified, unless exceptional circumstances exist (i.e. fraud or duress). A property distribution award (including the valuation of assets) is evaluated at the time of divorce, and a court is unlikely to reconsider that evaluation. July 2014, Essay 3 Feb 2011, Essay 5 G. Spousal & Child Support ■■ Spousal Support: When Support May be Awarded, Amount, & Termination • HIGH 4 of 49 Exams • • • Upon divorce, one spouse may be court ordered to provide spousal support (also referred to as maintenance or alimony) to maintain the former spouse’s standard of living and limit any unfair economic effects of a divorce. Under the Uniform Marriage and Divorce Act (UMDA), the court may order maintenance (spousal support) for either spouse only if it finds that the spouse seeking maintenance: (1) lacks sufficient property to provide for her/ his reasonable needs; AND (2) is either unable to support herself/himself through employment or is the custodian of a child whose condition or circumstances make it so that the custodian cannot seek employment. Determining the Amount of Support: Relevant factors a court will consider when determining the amount of spousal support include: (1) the financial resources of the party seeking support; (2) the time necessary for the spouse seeking support to obtain an appropriate job (include time for education or training); (3) the standard of living established during the marriage; (4) the duration of the marriage; (5) the age and the physical and emotional condition of the spouse seeking support; and (6) the ability of the spouse paying support to meet their needs while supporting the other spouse. In addition to these factors, some states will also consider marital misconduct or fault. Termination: Spousal support obligations terminate upon the death of the obligor spouse. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2010, Essay 6 Feb 2010, Essay 3 July 2007, Essay 3 Feb 1998, Essay 5 172 10 FAMILY LAW ■■ Spousal Support: • LOW 1 of 49 Exams Reinstatement of Prior Award Most courts will NOT reinstate prior alimony awards that were terminated by an annulled marriage under the “no-revival” approach, especially if the person seeking reinstatement was the one who obtained the annulment. However, some courts apply the “logic of annulment” doctrine, and will order reinstatement of prior alimony awards. Feb 2006, Essay 4 ■■ Child Support • HIGH 5 of 49 Exams • • Child Support Guidelines: A biological parent is legally responsible for a child whether or not the child was intended or wanted by the parent. Federal law requires that states provide child support guidelines that: (1) take into consideration all earnings and income of the non-custodial parent; AND (2) are based on specific descriptive and numeric criteria to compute the support obligation. College or Educational Expenses: Some states require support for continuing education. In such states, a child may lose the right to payments if the child DOES NOT follow the obligor parent’s reasonable instructions. Termination Upon Death: In most states, an obligation to pay child support terminates upon the death of the obligor. In those states, however, the deceased’s estate remains liable for past due payments. In some states, an obligation to pay child support DOES NOT terminate, and allows access to the deceased’s estate to fulfill future payments. Feb 2009, Essay 8 Feb 2008, Essay 3 July 1999, Essay 4 Feb 1998, Essay 5 Feb 1997, Essay 7 ■■ Modification & Enforcement of Child/Spousal Support Orders • HIGH 7 of 49 Exams • • • In most states, a child or spousal support order CAN ONLY be modified when there is a substantial change in circumstances of either the payor or payee spouse making the prior order unreasonable. Under the Uniform Marriage and Divorce Act (UMDA), modification of child/spousal support orders is more stringent, and is allowed only 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, while other courts will permit modification when the obligor parent acted in good faith. Courts CANNOT retroactively modify support orders. However, a court may prospectively modify or eliminate child support payments if that parent becomes the custodial parent. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2014, Essay 3 Feb 2011, Essay 5 July 2009, Essay 3 Feb 2008, Essay 3 Feb 2005, Essay 4 July 2001, Essay 5 July 1996, Essay 5 173 10 FAMILY LAW • Under the Uniform Interstate Family Support Act (UIFSA), states must give full faith and credit to child/spousal support orders of other states. Courts CANNOT modify child support orders of other states UNLESS: (1) the court has jurisdiction to issue an order; AND (2) either (a) all of the parties do not reside in the issuing state (obligor, obligee, and child) or (b) each party has consented in writing to jurisdiction in another state. An issuing state has continuing, exclusive jurisdiction over a controlling order if: (a) the state is the residence of one of the parties (obligor, obligee, or child); OR (b) all parties consent in a record or in open court that the state may continue to exercise jurisdiction. H. Child Custody & Visitation ■■ Child Custody: • HIGH 8 of 49 Exams • Courts determine child custody under the Best Interests of the Child Standard. This is a broad standard that gives great discretion to the court. In evaluating the best interests of the child, a court will evaluate the following: (1) the wishes of the parents; (2) the wishes of the child (for older children); (3) the age, financial well-being, and mental/ physical health of each parent; (4) the existence of new individuals in each parent’s life and who that person is; (5) the effect custody will have on the child’s ability to foster relationships with extended family; (6) history of domestic violence by either party; (7) stability of child’s home and school environments; and (8) anything else that the court believes will be equitable to evaluate. A court CANNOT award or deprive custody based on a parent’s lifestyle, values, or religious beliefs, but may take into account whether such behavior or conduct would endanger the child. A parent’s sexual behavior, by itself, CANNOT be used to deny custody. ■■ Child Custody: • MED 3 of 49 Exams Best Interests of the Child Standard Feb 2018, Essay 1 July 2013, Essay 3 July 2012, Essay 4 Feb 2009, Essay 8 July 2004, Essay 3 July 2002, Essay 5 Feb 2001, Essay 4 Feb 1996, Essay 3 Parent vs. Third-Party Custody When determining child custody between a parent and a third-party, it is presumed that custody with the parent is in the best interests of the child. Some states permit this presumption to be rebutted by showing that custody with the parent would be detrimental to the child. Since parental rights are constitutionally protected, courts MUST give great weight to a parent’s determination of what is best for the child. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2012, Essay 4 July 2002, Essay 5 Feb 2001, Essay 4 174 10 FAMILY LAW • • Courts will also give substantial weight to a mature child’s wishes when resolving a child custody dispute between a parent and a third-party. However, that child’s wishes are NOT determinative, and the court may disregard such wishes and grant custody in favor of a natural parent. Usually, a court will only grant custody to a third-party upon the showing of special circumstances (abuse, neglect, abandonment, mentally incompetent, or where the parent surrendered the child). ■■ Child Custody: • LOW 1 of 49 Exams Joint custody is usually an option only for parents who can cooperate, since it could be harmful to the child if the parents are hostile. Most courts will NOT impose joint custody on hostile or unwilling parents. Even in states that do permit the imposition of joint custody over a parent’s objection, a court CANNOT order joint custody unless it finds that this arrangement is in the child’s best interests. ■■ Child Custody: • LOW 1 of 49 Exams LOW 1 of 49 Exams • • MED July 2002, Essay 5 Parental Visitation Rights A parent not granted custody of the child is ENTITLED to reasonable visitation rights. The court cannot prevent or reduce visitation UNLESS the court finds (after a hearing) that visitation would seriously endanger the child’s physical, mental, moral, or emotional health. The court may modify an order granting or denying visitation rights whenever the modification would serve the best interests of the child. The payment of child support is independent from the right to visitation, such that a custodial parent’s interference with the other parent’s visitation rights DOES NOT suspend the other parent’s obligation to pay child support. ■■ Visitation: July 2004, Essay 3 Presumption of Parental Fitness Parents (biological or legal) are presumed that they are fit to care for their children. However, this presumption may be rebutted by clear and convincing evidence of conduct endangering the child (i.e. abuse, neglect, abandonment, mental incompetence). ■■ Visitation: • Joint Custody Feb 2009, Essay 8 Third-Party Visitation Rights Parental rights are constitutionally protected. Thus, courts MUST give great weight to a parent’s determination of what is best for the child. Feb 2017, Essay 3 July 2005, Essay 4 Feb 2001, Essay 4 3 of 49 Exams © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 175 10 FAMILY LAW • • Notwithstanding, some states permit third-party visitation with those who have a substantial relationship with the child (i.e. a de facto parent) when it’s in the best interests of the child. HOWEVER, a third-party must: (1) overcome the presumption that the parent is acting in the best interests of the child; AND (2) show that denial of visitation poses a risk of harm to the child. Once the parental presumption is overcome, a court will then consider whether visitation with the thirdparty is in the best interests of the child. The de facto parent is a person who has provided a child with daily parental concern, affection, and care over substantial time. ■■ Child Custody: • LOW 1 of 49 Exams Relocation of the Custodial Parent & Child A court will permit a custodial parent to relocate with the child if the relocation is: (1) made in good faith; AND (2) is in the best interests of the child. The court will balance the effects on visitation with the benefits of the relocation. Feb 2005, Essay 4 ■■ Modification of a Child Custody Order • MED 3 of 49 Exams • A child custody determination may be modified only if there is a substantial change in circumstances. Some states prevent modification within a certain time of the initial determination. In other states, a non-marital cohabitant is a change sufficient for a modification. It is important to note that custody determinations CANNOT be retroactively modified. A state court that had jurisdiction over the original child custody order retains continuous and exclusive jurisdiction to make modifications. However, another state court may be able to modify a child custody order in certain limited situations under the Parental Kidnapping Prevention Act (PKPA) or Uniform Child Custody Jurisdiction and Enforcement Act (UCCJEA). o Under the PKPA, a court may modify a custody or visitation determination made by another state only if: (1) it had jurisdiction to make an initial determination; AND (2) the issuing state either (a) no longer has jurisdiction, or (b) has declined to exercise jurisdiction. o Under the UCCJEA, a court may modify an order from another state only if: (1) it had jurisdiction to issue an initial order; AND (2) either (a) the issuing state determines it no longer has jurisdiction or that the current state is more appropriate or (b) the court determines that all parties do not reside in the issuing state. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2009, Essay 3 Feb 2005, Essay 4 July 2004, Essay 3 176 10 FAMILY LAW I. Rights of Unmarried Cohabitants ■■ Division of Property of Unmarried Cohabitants • MED 2 of 49 Exams • The party who has title to the property retains sole ownership of the property UNLESS the other party claims ownership under a contract theory or equitable remedy theory (resulting trust, constructive trust, quantum meruit). Either party may bring an action to partition jointly held property. A resulting trust is available if property is titled in one party’s name, but another party gave money to acquire the property with the intent to have ownership of it. A constructive trust is available if one party obtained title to property through wrongful conduct. Quantum meruit is available if one party was unjustly enriched by the services provided by another. The party who was unjustly enriched must pay the fair market value for the services provided. July 1999, Essay 4 Feb 1997, Essay 2 ■■ Agreements Between Unmarried Cohabitants • HIGH 4 of 49 Exams An agreement for the division of property between unmarried cohabitants may be express or implied. An express agreement (oral or written) between unmarried cohabitants is enforceable as long as it was not based on sexual relations. An implied agreement is also enforceable, but is generally more difficult to prove. A court may find an implied-in-fact contract regarding the division of property if the parties comingled funds during the relationship. Feb 2017, Essay 3 July 2006, Essay 4 July 1999, Essay 4 Feb 1997, Essay 2 ■■ Putative Spouse Doctrine • LOW 1 of 49 Exams • In some states, when a marriage is invalid due to some legal infirmity, an innocent party may be entitled to relief under the putative spouse doctrine. The Putative Spouse Doctrine protects the financial and property interests of a person who (1) entered into a void or voidable marriage, (2) believing in good faith that the marriage was valid. A determination of good faith is tested by an objective standard, and must rest on facts that would cause a reasonable person to have a good faith belief in the existence of a lawful marriage. If the doctrine applies, the putative spouse is entitled to the same marital property rights as a legal spouse (such as equitable property division and spousal support). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 3 177 10 FAMILY LAW J. Unmarried Parents & Their Children ■■ Establishing Paternity, Presumption of Legitimacy, & Paternity by Estoppel • HIGH 4 of 49 Exams • • • • Paternity may be established by any of the following methods: (1) a birth certificate; (2) legal presumptions; (3) when unmarried parents voluntarily sign an acknowledgement of paternity; (4) an unmarried biological father’s successful challenge of a presumption; (5) a paternity suit; and (6) the party’s actions by assuming parental responsibilities, establishing a substantial relationship, and holding the child out as his own. In most jurisdictions, there is a presumption that a child born during marriage is considered a marital child and is the child of the husband. This presumption can be rebutted by proof of the husband’s infertility or his lack of access to his wife. In determining parentage, a court will also consider the best interests of the child. Some states have established procedures for paternity disestablishment by which a husband or unmarried man who was erroneously identified as the father can eliminate child support orders. Most states require the challenge to be filed within two years. Under the equitable Doctrine of Paternity by Estoppel if a man who is not the biological father has (1) held himself out as the father, and (2) paid support, then he will be estopped from denying paternity. If paternity is established, that person will be responsible for child support obligations. Feb 2011, Essay 5 July 2005, Essay 4 July 2002, Essay 5 Feb 1995, Essay 2 ■■ Unmarried Biological Father’s Rights • MED 3 of 49 Exams • An unmarried biological father’s right to a relationship with his child is protected under the Due Process Clause only if the father: (1) has assumed parental responsibilities; AND (2) has established a substantial parental-child relationship (the stronger the relationship, the stronger the constitutional protections). If the child has a presumed father, most states require unmarried fathers to challenge paternity within two years. An unmarried father is entitled to notice of an adoption if: (a) his parental rights are protected under the Due Process Clause; OR (b) he acted consistent with a state’s guidelines for the putative father registry. A court is likely to hold that an unmarried father is NOT entitled to notice if none of the above standards is not met, even if the father was unaware of the child’s existence until after the fact. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2005, Essay 4 Feb 1999, Essay 5 Feb 1997, Essay 2 178 10 FAMILY LAW K. Parent, Child, & State ■■ Right to Control the Child’s Upbringing • MED 2 of 49 Exams • • • A parent’s right to control their child’s upbringing and education is a fundamental right and courts will NOT interfere with the exercise of this right (especially if both parents live together), UNLESS the well-being of the child is endangered. For this reason, courts will not decide disputes between parents of intact families, as they are private matters. Similarly, state agencies CANNOT interfere with family decisions UNLESS the well-being of a child is endangered (i.e. lifesaving medical treatment is needed). Education: A parent may provide a religious education or deny a child’s education because of religious beliefs. However, the U.S. Supreme Court has held that ALL children must at least attend school through the eighth grade, but parents have the choice where their children will attend school. Medical Care: Parental consent is required before medical care may be performed on a minor. Exceptions may be made in emergency circumstances or where prescribed by statute. When a parent refuses emergency medical care based on religious grounds, some states will honor the refusal and others will not. Those states that DO NOT honor the parent’s views may hold the parents liable for child endangerment. Courts will consider whether strong facts in favor of treatment exist and will weigh the risks and benefits of the treatment. July 2013, Essay 3 July 2000, Essay 5 ■■ Intra-Family Lawsuits & Immunities • LOW 1 of 49 Exams Under common law, spouses could not sue each other (interspousal immunity), and parent-child suits were not permitted (parents were immune). However, today most states have abolished intra-family immunity, and permit lawsuits between spouses and between a parent and child. Feb 2002, Essay 5 ■■ Loss of Consortium Claims • LOW 1 of 49 Exams A claim for loss of consortium is generally only available to married couples, and is intended to compensate a spouse for loss of the other spouse’s companionship, sexual relations, and affection. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2002, Essay 5 179 10 FAMILY LAW L. Adoption ■■ Adoption & Parental Consent • HIGH 6 of 49 Exams • • Adoption severs the biological parent’s legal rights and responsibilities for the child. In most states, biological parents lose the right to visit their child after adoption. Some states do not terminate a child’s inheritance rights if the child was adopted by a blood relative. Generally, the consent of BOTH parents is required to place a child up for adoption. However, where the child is nonmarital, consent of the biological father is only required when he has assumed parental responsibility. o In determining if a father has assumed parental responsibility, courts will analyze such factors as the extent of his interaction with the mother during pregnancy, whether the father paid for medical expenses incurred during pregnancy, and his willingness and ability to assume custody and care for the child (as opposed to merely protesting the adoption). o 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) has abandoned the child (usually for at least one year) without contact; OR (d) has been found to have permanently neglected the child. A parent’s consent to an adoption CANNOT be withdrawn after the adoption decree is entered with the court. However, prior to an adoption decree, consent may be withdrawn if it is in the best interests of the child (courts will consider the child’s needs and the parent’s characteristics, motives, and ability to support the child). ■■ Adoption: • LOW 1 of 49 Exams July 2011, Essay 6 Feb 2008, Essay 3 July 2006, Essay 4 Feb 2001, Essay 4 Feb 1999, Essay 5 Feb 1997, Essay 2 Visitation for Biological Parents Most states will NOT allow visitation for biological parents because it would interfere with the adoptive parents’ rights and conflict with the purpose of adoption. However, some courts will permit visitation if it is in the best interests of the child. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 1997, Essay 2 180 10 FAMILY LAW M. Alternatives to Adoption ■■ Artificial Insemination & In Vitro Fertilization • MED 2 of 49 Exams • • Artificial Insemination is the introduction of sperm into a female’s uterus for the purpose of achieving a pregnancy by means other than sexual intercourse. In Vitro Fertilization is the process of fertilization by combining an egg and sperm in a laboratory, and transferring it to the female’s uterus. Under the Uniform Parentage Act, a husband is presumptively the father of a child born through artificial insemination or in vitro fertilization if: (1) he consented in writing; AND (2) a medical doctor performed the procedure. In such instance, he will be deemed the legal father of the child, even if he is not the biological father. Generally, the sperm donor’s rights are severed (he has no parental rights). If the husband is the sperm donor, he is both the biological father and legal father of the child. July 2002, Essay 5 Feb 1995, Essay 2 ■■ Surrogacy Arrangements • LOW 1 of 49 Exams • Surrogacy is when a woman agrees to carry a pregnancy for another person or couple, who will become the newborn child’s parent(s) after birth. In the states that allow surrogacy agreements, a court will only enforce the agreement under certain conditions, such as prior approval by the court. In some states, surrogacy contracts are not permitted, as against public policy. In these states, the biological parent may enforce his or her parental rights over the child. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 1995, Essay 2 181 11 REAL PROPERTY Grantor = the person selling/transferring the property Grantee = the person buying/receiving the property A. Present Estates & Future Estates ■■ Present Estates: • MED 0 of 24 Exams • A fee simple absolute is a conveyance of absolute ownership of real property (without any conditions placed upon it). The property is freely devisable (leave it in a will), descendible (passed to descendants), and alienable (may be transferred during the grantor’s lifetime). A fee tail is a conveyance of real property to a person and their heirs. Most jurisdictions have abolished fee tail ownership, and treat such conveyances as a fee simple absolute. ■■ Present Estates: • MED 1 of 24 Exams • Fee Simple Absolute & Fee Tail MEE TIP On the exam, be sure to connect the present estate (defeasible fees, life estate) to the applicable future interest (reverter, re-entry, remainder). All present estates are connected to a future interest upon the occurrence of the condition specified (except for present estates that provide for absolute ownership). 0 exams Defeasible Fees A fee simple defeasible is a conveyance of property that has conditions placed on it. It is created when the grantor uses express conditional language to indicate that the conveyance will be terminated upon the occurrence (or non-occurrence) of an event or condition. A fee simple defeasible gives the grantee a present possessory interest in the property, BUT reserves a future interest in the property in favor of either the grantor or a third party. Three types of fee simple defeasibles exist: (1) fee simple subject to a condition subsequent (reserves a future interest in the grantor); (2) fee simple determinable (reserves a future interest in the grantor); AND (3) fee simple subject to executory limitation (reserves a future interest in a thirdparty). o Fee Simple Determinable: A fee simple determinable is a conditional conveyance that allows the grantor to retain a possibility of reverter. It is created when the grantor uses words of duration (i.e. so long as, during, while, the property shall revert) in the conveyance to indicate that the interest being conveyed will automatically terminate if a specified condition occurs. o Fee Simple on Condition Subsequent: A fee simple subject to a condition subsequent is a conditional conveyance that allows the grantor to retain a right of re-entry. It is created when the conveyance expressly states that the interest being conveyed is subject to the grantor’s right of re-entry if a specified condition occurs. If the condition occurs, the grantee’s present © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2010, Essay 5 182 11 REAL PROPERTY • interest in the property will be lost ONLY IF the grantor affirmatively exercises his right of re-entry and re-takes possession of the land. o Fee Simple Subject to Executory Interest: A fee simple subject to an executory interest is a conditional conveyance of real property, in which a thirdparty (not the grantor or his heirs) will be entitled to the property upon the occurrence of a specified condition. It is created when the grantor uses words such as “To person X, so long as (or “but if”) … to person Y.” If the deed language is ambiguous as to which defeasible fee is meant, courts construe the language in accordance with the grantor’s intentions. If it’s unclear whether a fee simple determinable or a fee simple subject to condition subsequent is intended, courts typically favor a fee simple subject to condition subsequent. ■■ Present Estates: • MED 0 of 24 Exams • A life estate is a conveyance of real property where a specified life-tenant is entitled to possession of the property during their lifetime, and upon the life-tenant’s death the property transfers outright to another party (as specified in the deed). The person who takes the property after the lifetenant’s death is known as the remainderman. The life-tenant is responsible for ordinary expenses and taxes relating to the property during their lifetime, and cannot commit waste (causing the property to decrease in value). ■■ Present Estates: • MED 1 of 24 Exams MED 1 of 24 Exams • 0 exams Statute of Limitations An interest in a fee simple determinable or fee simple subject to condition subsequent lasts through the applicable statute of limitations period for that interest. An action for possession can be brought anytime within the statute of limitations (usually a set number of years after the cause of action accrues). ■■ Future Estates: • Life Estate July 2010, Essay 5 Reverter & the Right of Re-Entry Reverter and the right of re-entry is connected to the occurrence of a condition for a defeasible fee conveyance. A possibility of reverter creates a future interest of possession in the grantor if a specified condition occurs. If such condition occurs, the present possessory interest in the grantee will automatically terminate and vest in the grantor. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2010, Essay 5 183 11 REAL PROPERTY • A right of re-entry (also known as a power of termination) creates a future interest in the grantor, wherein the grantor has the right to re-enter and take the property if a specified condition occurs. The present interest in the property is lost ONLY IF the grantor exercises that right (the present possessory interest does not automatically terminate upon the occurrence of the specified condition). ■■ Future Estates: • MED • 1 of 24 Exams • Vested and Contingent Remainders A vested remainder is a future interest in land that is given to an identifiable person with no conditions. A contingent remainder is a future interest in land that is conditioned upon the occurrence or non-occurrence of a specified event. In most jurisdictions, a future remainder interest is devisable, and passes to that person’s heirs. When the remainder is conditioned on survivorship (i.e. “my surviving or living children”), the majority view is that the person holding the remainder interest MUST survive the life tenant to be entitled to the interest, while the minority view is that the person need only to survive the testator. July 2010, Essay 5 B. Co-Tenancy ■■ Tenancy in Common • MED 1 of 24 Exams • Tenancy in common is the default estate created by a conveyance or bequest of real property to two or more people, UNLESS: (a) there is express language stating that the parties have a survivorship right creating a joint tenancy; OR (b) if the conveyance of real property is stated “as husband and wife” creating a tenancy by the entirety (some states create a tenancy by the entirety by default if the conveyance is to a married couple). To create a tenancy in common, the grantor need not use explicit language. Each tenant in common owns an undivided interest in the property, and has the right to use and enjoy the entire property. There are NO survivorship rights with a tenancy in common, and upon death the tenant’s interest passes to their estate. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2009, Essay 4 184 11 REAL PROPERTY ■■ Joint Tenancy: • MED 1 of 24 Exams • A conveyance of real property to two or more persons creates a joint tenancy when the four unities are present: (1) unity of time (all interests were received at the same time); (2) unity of title (all interests were acquired by the same instrument); (3) unity of interest (all ownership interests are equal); AND (4) unity of possession (all interests have equal rights of possession). There MUST be clear express intent to create a joint tenancy, which may be satisfied by including such terms as “joint tenants”, “right of survivorship”, “joint tenants with right of survivorship”, or even “jointly” (if intent is proven). A right of survivorship means that when one joint tenant dies his interest in the land is automatically transferred to the other joint tenant(s). ■■ Joint Tenancy: • MED 1 of 24 Exams • • Formation Feb 2009, Essay 4 Severance Generally, when one joint tenant unilaterally transfers his ownership interest in the real property, the joint tenancy is severed and the tenants will then hold the property as tenants in common. When a joint tenant conveys his interest in a joint tenancy to a third-party, that party takes the property as a tenant in common. If there are only two joint tenants, the joint tenancy is severed. However, if there are more than two joint tenants, the joint tenancy remains, but only among the other joint tenants. When a joint tenant takes out a mortgage on her interest, the mortgage’s effect on the joint tenancy will depend on the jurisdiction. In a lien theory jurisdiction, the mortgage will NOT sever the joint tenancy. However, in a title theory jurisdiction, the mortgage will sever the joint tenancy, and the tenants will then hold the property as tenants in common. Feb 2009, Essay 4 ■■ Co-Tenant’s Entitlement to Rent or Reimbursement for Repairs/Improvements • MED 0 of 24 Exams Rent from Co-Tenant: An out-of-possession co-tenant DOES NOT have the right to receive rent from the inpossession co-tenant, UNLESS the in-possession co-tenant wrongfully ousted the out-of-possession co-tenant from the property. When one co-tenant voluntarily quits (or simply does not use) the property, the other co-tenant is not liable for rent for his use of the entire property. Thus, a co-tenant CANNOT collect rents from another co-tenant who is in © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 185 11 REAL PROPERTY • • • exclusive possession of the premises, unless: (a) there is an agreement to the contrary; OR (b) the co-tenant seeking rent was wrongfully ousted. Rent from a Third-Party: If an in-possession co-tenant rents the property to a third-party, the out-of-possession co-tenant is entitled to his fair share of the rent paid by the third-party. Reimbursement for Repairs: A co-tenant is entitled to reimbursement for the costs of necessary repairs that the co-tenant paid for, UNLESS there has been a wrongful ouster. The amount of reimbursement is determined by the percentage share each co-tenant owns in the property (i.e. if a co-tenant owns a 50% share then the co-tenant is obligated to pay 50% of the repair costs). Reimbursement for Improvements: A co-tenant who makes improvements to the property is NOT entitled to reimbursement from the other co-tenant(s), UNLESS there is a separate agreement to the contrary. At the end of the co-tenancy (i.e. a partition or sale of the property), the improving co-tenant bears all the downside risk of the improvements, but also has all of the upside gain. Thus, if the property appreciated because of the improvements, only the improving co-tenant is entitled to that increase in value. C. Landlord & Tenant Issues ■■ Types of Leasehold Interests • HIGH 2 of 24 Exams • A lease provides the tenant with a present possessory interest in the real property (subject to any terms and conditions agreed to), and gives the landlord a future interest in the property. In most states, the statute of frauds requires a lease of more than one year to be writing. Three types of leaseholds exist: (1) tenancy for years; (2) periodic tenancy; AND (3) tenancy at will. o A Tenancy for Years lasts for a fixed period of time (there is a specified beginning and end date), as agreed by the landlord and tenant. The lease automatically terminates after the fixed period. Normally, a tenant CANNOT terminate a lease prior to the end of the term, unless constructive eviction or another exception applies. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2013, Essay 1 July 2008, Essay 4 MEE TIP On the exam, apply the type of tenancy based on landlordtenant relationship described in the essay question. 186 11 REAL PROPERTY o o A Periodic Tenancy continues for a specific period (i.e. weekly or monthly) until it is terminated by proper notice from either party. A periodic tenancy may be created: (a) expressly by agreement; (b) by implication if rent is paid at specific periods (i.e. every week or month); OR (c) by law when a tenant-for-years remains after termination of the period or when a lease agreement is invalid.  A periodic tenancy can only be terminated (1) at the end of a natural lease period, AND (2) requires written notice at least a full period in advance. For example, a periodic month-to-month tenancy requires a one-month notice of termination. An exception exists for a periodic year-to-year tenancy, in that only 6-months’ notice is required. A Tenancy at Will continues until either party terminates it, and is usually created by an express agreement. In most states termination of a tenancy at will requires giving: (1) notice of termination; AND (2) a reasonable time to quit the premises. In a minority of states, termination does not require notice to the tenant. ■■ Tenant Duties: • MED 0 of 24 Exams Duty to Pay Rent A tenant’s duty to pay rent runs with the land. If a tenant remains on the property and does not pay rent, the landlord may: (a) initiate eviction proceedings; OR (b) allow the tenant to remain on the property and sue for damages. If the tenant abandons the property and does not pay rent, the landlord may be required to take reasonable steps to mitigate his losses (depending on the applicable state law). 0 exams ■■ Landlord’s Rights and Liabilities Concerning a Hold-Over Tenant • MED 0 of 24 Exams A landlord has two options if a tenant holds-over (when the tenant retains possession after the expiration of the lease): (a) he may evict the tenant; OR (b) he may hold the tenant over. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 187 11 REAL PROPERTY • By holding the tenant over, an implied month-to-month tenancy is created with terms identical to the original lease terms. Although, if the tenant was informed by the landlord before the end of the lease term, that renewal of the lease would involve higher rent, the higher rent would apply. At common law, the duration of the implied periodic tenancy was equal to that of the original tenancy. Due to the potential harshness of this rule, most states have modified the common law, making all holdover tenancies implied month-to-month tenancies (unless otherwise agreed by the parties). ■■ Landlord Duties: • MED 1 of 24 Exams • A warranty of habitability is implied in every residential lease. The implied warranty of habitability requires that the landlord provide a place to live (apartment, home) that is habitable. A property is deemed habitable if it’s reasonably suitable for human needs (the local housing or public safety code must be considered for specifics). o Some courts impose the implied warranty of habitability in commercial leases in limited circumstances. Upon a breach of the warranty of habitability, the tenant may: (a) move out and terminate the lease; (b) withhold or reduce the rent; (c) repair the issue and deduct the cost from the rent; OR (d) remain on the premises and sue for damages. ■■ Landlord Duties: • MED 1 of 24 Exams • • Implied Warranty of Habitability Feb 2013, Essay 1 Constructive Eviction Every lease includes an implied covenant of quiet enjoyment, which prevents a landlord from interfering with the tenant’s quiet enjoyment and possession of the property. This covenant is breached if the tenant is constructively evicted. Constructive eviction occurs when: (1) the landlord breached a duty to the tenant; (2) the landlord’s breach caused a loss of the substantial use and enjoyment of the premises; (3) the tenant gave the landlord notice of the condition; (4) the landlord failed to remedy the condition within a reasonable time after notice was given; AND (5) the tenant vacated the premises. Upon being constructively evicted, the tenant may terminate the lease and seek damages. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2013, Essay 1 188 11 REAL PROPERTY • • In residential leases, the landlord has a duty to repair common areas. The landlord also has a duty to warn the tenant of any latent defects that create a risk of serious harm that the landlord knows of (or should know of). In commercial leases, landlords generally DO NOT have a duty to repair, but public authorities may require the landlord to do so in certain instances. ■■ Landlord Duties: • HIGH 2 of 24 Exams • • Duty to Mitigate Damages At common law, a landlord had NO duty to mitigate his damages. However, most states now impose a duty on a landlord to take reasonable steps to mitigate his losses (i.e. attempting to lease the property to another tenant). However, in those states, the mitigation does not need to be successful in order to recover damages (only reasonable steps are required). If a landlord fails to mitigate, some jurisdictions hold that the tenant is not liable for any rent or damages after the date of abandonment. If the landlord leases the property to another tenant, the landlord would be able to sue for the difference between the original rent payments and the rent payments under the new lease (as well as any incidental damages). At common law, a landlord could only recover rent that was past due. Some states now permit a landlord to recover future payments under the lease, wherein the damages are measured by the value of rent for the remaining lease term less the fair market value at the time the tenant wrongfully terminated. Feb 2017, Essay 6 Feb 2013, Essay 1 ■■ Assignment of a Lease • HIGH 2 of 24 Exams • A lease may be freely assigned UNLESS a provision in the lease states otherwise. However, an assignment can never be for a longer period of time than the lessor’s remaining lease term. An assignment occurs when a tenant (the assignor) transfers ALL of his remaining interest in a lease to a third-party (the assignee). The assignee is liable to the landlord for rent and all other covenants that run with the land because privity of estate arises between the assignee and the landlord. The assignor also remains liable to the landlord for any rent not paid by the assignee because privity of contract continues to exist with the landlord. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 6 July 2008, Essay 4 189 11 REAL PROPERTY • • If the lease agreement requires the landlord’s consent for an assignment, then such consent MUST be obtained by tenant in order to assign the lease. When a lease is silent as the standard of consent (a silent consent clause), two different approaches have been adopted by state courts. o In most states, a silent consent clause allows the landlord to withhold consent for any reason, even if unreasonable or arbitrary (except in violation of discrimination laws). o However, some states require that the landlord must have a reasonable basis for withholding consent (it cannot be unreasonably withheld). Examples of a reasonable basis included the inability to fulfill terms of the lease, financial irresponsibility or instability, suitability of the premises for intended use, or intended unlawful or undesirable use of the premises. Additionally, a landlord may be deemed to waive his right to enforce a provision prohibiting assignments if he accepts rent from the assignee. ■■ Subleases • MED 0 of 24 Exams • • A lease may be freely sublet UNLESS a provision in the lease states otherwise. A sublease occurs when a tenant (the sublessor) transfers only some of his remaining interest in a lease to a third-party (the sublessee). A sublease can never be for a longer lease term than the sublessor has remaining in his lease. The sublessee is NOT liable to the landlord for rent or other covenants that run with the land because there is no privity of estate with the landlord. If a lease prohibits subleases, the landlord waives the right to enforce the provision if he accepts rent from the sublessee. The sublessee CANNOT enforce covenants made by the landlord under the lease, but can enforce any covenants made by the sublessor. ■■ Termination of Leases: • HIGH 2 of 24 Exams 0 exams Surrender Surrender is an agreement between the landlord and tenant to end a lease early. If the landlord accepts the surrender, the tenant’s duty to pay rent after the acceptance ends. If the landlord does not accept the surrender, the tenant is deemed to have abandoned the lease, and is liable for damages. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 6 Feb 2013, Essay 1 190 11 REAL PROPERTY • Unless otherwise agreed, an attempt by the tenant to end the lease early DOES NOT constitute a surrender UNLESS the landlord accepts the surrender. A landlord’s acceptance must be clear (solely holding onto keys left by a tenant is not sufficient acceptance without other evidence showing intent to accept the surrender). D. Covenants & Equitable Servitudes ■■ Real Covenants • MED 0 of 24 Exams • • A real covenant is a non-possessory interest in land that obligates the holder to either do something or refrain from doing something to the land. It differs from equitable servitudes in that the remedy is damages (rather than injunctive relief). To enforce the benefit of a covenant there must be: (1) a writing that satisfies the statute of frauds; (2) intent that the covenant runs with the land; (3) vertical privity between succeeding parties (exists when the successor holds the entire interest held by the predecessor); AND (4) the covenant must touch and concern the land (make the land more useful or valuable to the benefitted party). To enforce the burden of a covenant, ALL OF THE ABOVE REQUIREMENTS MUST BE MET, PLUS: (1) there must be horizontal privity between the original parties (exists when the two parties shared some interest in the land independent of the covenant); AND (2) the new owner must have notice of the covenant. Notice may be: (a) actual; (b) constructive (the covenant is recorded in previous conveyances); OR (c) by inquiry (an inspection of the land would reveal the covenant). 0 exams ■■ Equitable Servitudes • MED 0 of 24 Exams • Equitable servitudes are covenants (burdens on real property) that equity will enforce if the burdened estate had notice of the covenants (regardless of whether the covenants run with the land at law). It differs from real covenants in that the remedy is injunctive relief (rather than damages). To enforce the benefit of an equitable servitude there must be: (1) a writing that satisfies the statute of frauds; (2) intent for the servitude to be enforceable; AND (3) the servitude must touch and concern the land (make the land more useful or valuable to the benefitted party). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 191 11 REAL PROPERTY • To enforce the burden of an equitable servitude, ALL OF THE ABOVE REQUIREMENTS MUST BE MET, PLUS the new owner must have notice of the servitude. Notice may be: (a) actual; (b) constructive (the servitude is recorded in previous conveyances); OR (c) by inquiry (an inspection of the land would reveal the servitude). ■■ Common Scheme or Plan Doctrine (Reciprocal Negative Servitude) • MED 0 of 24 Exams • Under the Common Scheme or Plan Doctrine, a court will imply reciprocal restrictive covenants on parcels of land in a subdivision sold by a developer only if: (1) the developer had a common scheme or plan that all parcels of land would be subject to the restriction at the time the parcel in the subdivision was sold; AND (2) the defendant land owner had actual, inquiry, or record notice of the restriction. Reciprocal negative servitudes only apply to negative covenants and equitable servitudes. In showing the defendant had notice, the proponent of the suit must show either: (a) there was a common scheme or plan and that it was obvious from looking at the subdivision that a general pattern of restrictions existed (inquiry notice); (b) the defendant had actual notice of the restriction; OR (c) the defendant land owner had constructive notice through documents publicly recorded (record notice). 0 exams ■■ Restrictive Covenants: Common Interest Ownership Communities & Property Owner Associations • MED 0 of 5 Exams • Under the Restatement (Third) of Real Property, a Common Interest Community (“CIC”) is defined as a development or neighborhood in which individually owned lots/units are burdened by a servitude that imposes an obligation to: (a) pay for or contribute to the maintenance of the property held or enjoyed in common by the individual owners; OR (b) pay dues or assessments to an association that (i) provides services or facilities to the common property or to the individually owned property or (ii) that enforces other servitudes burdening the property in the development or the neighborhood. Common forms of CIC’s are condominiums, cooperatives, and home owner associations. Cooperatives are treated as real property, even though the owner does not own the premises (he only holds shares of the cooperative association and the right to occupy the space). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams This topic was first testable on the Feb 2017 exam. 192 11 REAL PROPERTY • • Residents in a CIC are bound to governance by a community association, and are subject to obligations (restrictive covenants) that have been recorded in land records and run with the land. These covenants bind ALL successive owners of the property. The power of the association to govern, collect fees or assessments for maintenance, and to enforce rules concerning the use and appearance of individual properties is established through a recorded declaration of covenants. In addition, the board of a community association can pass specific regulations authorized by the recorded declaration. These regulations may be changed as the board sees fit. Generally, courts will grant injunctions or specific performance to enforce such obligations and regulations. However, courts generally are more deferential to recorded covenants than to rules enacted by the board. E. Easements & Licenses ■■ Easements by Grant, Prescription, Implication, & Necessity • HIGH 2 of 24 Exams • An easement is a non-possessory interest in the use of someone else’s land. Easements are either in gross or appurtenant. o An easement in gross benefits a specific owner’s enjoyment and use of the land and DOES NOT attach to the land (unless the easement is for commercial activity). It DOES NOT pass to subsequent landowners. o An easement appurtenant benefits any owner’s enjoyment and use of the land and DOES attach to the land. It DOES pass to subsequent landowners so long as the new owner has notice. Notice may be: (a) actual; (b) constructive (the easement is recorded in previous conveyances); OR (c) by inquiry (a reasonable person would have inquired about the existence of any easements or interests in land based on the facts or circumstances of the property). Any easement may be created by: (1) an express grant; (2) prescription; (3) implication; OR (4) necessity. o An Easement by Grant is an express agreement by the grantor allowing the easement, and must: (1) be in a writing signed by the grantor that satisfies the statute of frauds (if the duration is more than one year); (2) identify the land and parties involved; AND (3) indicate the grantor’s intent to convey the easement. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 4 Feb 2012, Essay 8 MEE TIP On the exam, apply the type of easement based on the fact pattern in the essay question. 193 11 REAL PROPERTY o o o An Easement by Prescription is created when the possessor’s use of the land is: (1) open and notorious; (2) continuous; (3) hostile (without permission from the owner of the land); AND (4) for the statutory period. An Easement by Implication (also known as a implied easement) is 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 of the land; (3) a continuous and obvious indication that the use was intended to be permanent; (4) the use affects the value of the land conveyed; AND (5) such use is reasonably necessary for the owner’s use and enjoyment of the land conveyed (the easement is important or highly convenient). An Easement by Necessity is created if: (1) the original piece of land owned by one owner is subdivided; AND (2) the access the easement provides is essential to the use of the property because there is no other ingress or egress available (i.e. no viable road to access property). ■■ Scope of an Easement • MED 0 of 24 Exams The scope of an easement depends on how the easement was created. An express easement by grant is limited to what was agreed to by the parties. An easement implied by prior use is limited in scope to the prior use. A prescriptive easement is limited in scope to the actual usage during the period required to create the easement. An easement by necessity is limited to remedying the necessity at issue. 0 exams ■■ Termination of an Easement • HIGH 2 of 24 Exams Typically, an easement is perpetual. However, an easement may be terminated by: (1) estoppel (when the servient estate owner reasonably relies on, or materially changes his position, due to the easement holder’s assurance that the easement will no longer be enforced); (2) termination of the necessity that created the easement; (3) involuntary destruction of the servient estate; (4) condemnation of the servient estate; (5) written release; (6) abandonment (easement holder demonstrates, through physical actions, an intent to never use the easement again); (7) merger (holder of the easement obtains title to the servient estate); OR (8) prescription. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2012, Essay 8 July 2011, Essay 4 194 11 REAL PROPERTY ■■ Licenses • MED 0 of 24 Exams • • A license is NOT an interest in land, but merely a privilege to use another’s land in a particular way. The licensee must act within the scope of the license. A license DOES NOT need to be in writing. A license may be revoked at any time by the licensor. However, a licensor may be estopped from revoking a license if the licensee has invested a substantial amount of money and/or labor in reasonable reliance on the continuation of the license. 0 exams F. Fixtures ■■ Fixtures • MED 1 of 24 Exams • • A fixture is an item that has been affixed to the land/dwelling so that it is no longer personal property, but instead becomes part of the land. Whether an item is a fixture is determined by the objective intent of the party who attached the item. To determine whether the item is a fixture, courts consider: (1) the nature of the item; (2) the manner in which it is attached; (3) the damage that would result if the item were removed; and (4) the extent to which the item is adapted to the property (i.e. an installed custom window). The more the item is incorporated into the premises, the more likely the court will find the item to be a fixture. Under the trade fixture exception, an item that is attached to the property for use in the tenant’s trade or business is NOT a fixture UNLESS its removal would cause substantial damage to the property. An item that is not a fixture may become one if it’s not removed before the end of the lease term. July 2016, Essay 4 G. Adverse Possession ■■ Adverse Possession • HIGH 2 of 24 Exams Adverse Possession Elements: Adverse possession allows someone in possession of land owned by another to acquire title to that land when the possession of the property is: (1) continuous for the statutory period (usually 10 years); (2) open and notorious (to put an owner on notice of the adverse possession upon inspection of the land); (3) exclusive; (4) actual (possess the property as the true owner would); AND (5) hostile and under a claim of right (without the true owner’s consent). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2015, Essay 4 July 2007, Essay 6 195 11 REAL PROPERTY Some states also require the possessor to have a good faith belief that he owned the land. o Most states DO NOT require the possessor to pay the property taxes for the 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. by deed or bequest). Title Acquired: An adverse possessor can only acquire title to the portion of land that he has met all the adverse possession elements (unless constructive adverse possession applies). An adverse possessor acquires the same title the original owner possessed, and is therefore subject to any applicable easements (unless the easement was terminated thorough prescription or other valid means). Constructive Adverse Possession: Under the Doctrine of Constructive Adverse Possession, if a person takes possession of only a portion of the land covered under color of title (an invalid deed to the land), that possession extends to the entire portion of land described in the deed/title for adverse possession purposes. o • • • H. Land Conveyances ■■ Requirements for a Valid Land Sale Contract • MED 0 of 24 Exams • A valid contract for the sale of land must satisfy the statute of frauds. The contract must: (1) be in a writing; (2) describe the property; (3) identify the parties involved; (4) contain the purchase price; AND (5) be signed by the grantor/ grantee (depending on whom the contract is being enforced against). Once a deed to the property is delivered and accepted, the land sale contract merges with the deed and any rights to sue under the contract are extinguished (although the buyer may sue upon the deed). 0 exams ■■ Warranty of Marketable Title • MED 1 of 24 Exams A seller has a duty to convey marketable title to a buyer. Marketable title is title that is free from any cloud or subject to any adverse claim. Title is unmarketable when it contains a substantial defect, such as: (1) defects in the record chain of title; and/or (2) encumbrances, such as mortgages, liens, restrictive covenants, easements, a claim of adverse possession, and zoning violations. Although zoning violations make title unmarketable, zoning restrictions do not. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 4 196 11 REAL PROPERTY • • If the seller CANNOT convey marketable title at the closing, the buyer may withdraw from the contract without penalty. The requirement to deliver marketable title is a condition that benefits the purchaser (not the seller), and the purchaser may choose to waive the requirement. A seller CANNOT cancel a real estate contract for failure to deliver marketable title if the buyer chooses to waive the requirement. Merger Doctrine: While a seller must convey marketable title at closing, once a deed to the property is delivered and accepted, the land sale contract merges with the deed and any rights to sue under the contract are extinguished. Thus, after closing the buyer may only sue upon the deed. However, some courts will not apply the merger doctrine if it doesn’t carry out the probable intent of the parties (i.e. mutual mistake, scrivener’s error). ■■ Warranty of Marketable Title: • MED 1 of 24 Exams • Damages Recoverable Ordinarily, damages for a breach of Covenant Against Encumbrances or a breach of a Warranty of Title are measured by the reduced value of land (subtract the value of the property after the defect is discovered from its value before the defect existed). Courts are divided on whether damages may be recovered when the encumbrance is known or obvious to the plaintiff (when notice exists). Notice may be actual, constructive, or on inquiry. A person has actual notice of information directly received (i.e. observed, expressly told, language in the contract of sale or deed). A person is on constructive notice of any information that could have been obtained from an inspection of public land records (i.e. search of the grantorgrantee index). A person is on inquiry notice of information that would be revealed upon a reasonable inspection of the land. Feb 2018, Essay 4 ■■ Doctrine of Equitable Conversion & Risk of Loss • MED 1 of 24 Exams Once a contract for the sale of land is signed, the doctrine of equitable conversion splits ownership between the buyer and the seller. The buyer has equitable title, while the seller has legal title and holds the property in trust for the buyer. The buyer’s equitable ownership is considered real property, while the seller’s legal title is considered personal property. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2009, Essay 4 197 11 REAL PROPERTY • In the majority of jurisdictions, the risk of loss transfers to the buyer upon the signing of the contract. In a minority of jurisdictions, the seller bears the risk of loss UNLESS the buyer has possession or title to the property at the time of loss. ■■ Time of Performance for Real Estate Contracts • MED 0 of 24 Exams 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 UNLESS the real estate contract contains a clause that “time is of the essence”. If the contract contains a time is of the essence clause, the buyer must perform on the closing date (unless agreed otherwise). If the buyer fails to perform, it will be deemed a material breach, and the seller may keep the buyer’s down payment as liquidated damages. 0 exams ■■ Action for Specific Performance of Real Property • MED 0 of 24 Exams Specific performance is an equitable remedy that is appropriate when monetary damages will not fully remedy a party’s complaint. Real property is always considered unique, and specific performance is an appropriate remedy UNLESS the property has since been sold to a bona fide purchaser without notice. 0 exams ■■ Home Builder’s Implied Warranty • HIGH 2 of 24 Exams • The Home Builder’s Implied Warranty protects a purchaser of a newly constructed home against latent defects, and warrants that the building is safe and fit for human habitation at the time of sale. A latent defect is one that could not have been discovered by reasonable inspection. Breach of the warranty allows a buyer to recover damages for defects discovered within a reasonable amount of time due to: (a) defective construction; or (b) construction not performed in a workmanlike manner (the accepted norms of the industry). Some courts require privity of contract between the purchaser and the builder, and will NOT extend the warranty to remote grantees and subsequent purchasers. However, other courts will apply the warranty to subsequent owners of the property because they are in the same vulnerable position as the initial purchaser. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 4 July 2013, Essay 8 198 11 REAL PROPERTY I. Title to Real Property ■■ Deed Requirements • MED 1 of 24 Exams • • A valid deed must: (1) be in a writing; (2) be signed by the grantor; (3) identify the grantor and grantee; (4) describe the property; AND (5) indicate the grantor’s present intent to convey the land. Intent to Convey: Any words indicating the grantor’s intent to immediately convey the property are sufficient (i.e. grant, convey, give, transfer). When a deed is unconditional on its face and given to a grantee, additional oral conditions are NOT valid. However, if the same deed is instead given to a third-party (i.e. to be held in escrow), any additional conditions would create a conditional delivery. July 2007, Essay 6 ■■ General Warranty Deed, Special Warranty Deed, & Quitclaim Deed • HIGH 4 of 24 Exams • Upon the transfer of land, the seller may execute and deliver to the buyer one of the following three types of deeds: (1) general warranty deed; (2) a special warranty deed; or (3) a quitclaim deed. The buyer’s rights under the deed depend on the type. A general warranty deed contains six covenants of title; three present and three future. o The present covenants are the covenants of: (1) seisin (the grantor is the rightful owner); (2) right to convey (the grantor has the right to make the grant); AND (3) against encumbrances (there are no encumbrances against the title). These present covenants can only be breached at the time of conveyance.  Under common law, present covenants contained in a general warranty deed (seisen, right to convey, and against encumbrances) were NOT enforceable by remote grantees. However, some states will enforce such covenants against encumbrances if the remote grantee did not have notice of the encumbrance. o The future covenants are the covenants of: (1) © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2018, Essay 4 Feb 2015, Essay 4 July 2013, Essay 8 Feb 2010, Essay 2 MEE TIP On the exam, apply the rule for the specific type of deed(s) noted in the fact pattern of the essay question. 199 11 REAL PROPERTY • • warranty (grantor will defend grantee against any third party claims to title); (2) quiet enjoyment (grantee will not be bothered by a third party’s lawful claim to title); AND (3) further assurances (the grantor will do whatever is reasonable to perfect title if problems arise). These future covenants can be breached at any time upon the interference with the grantee’s possession of the property. A special warranty deed only warrants that the seller has not breached the covenants of title during his period of ownership: (1) seller has not previously conveyed the property; and (2) there are no encumbrances against the title made by the seller. A quitclaim deed DOES NOT contain any covenants or promises to the buyer. It is an “as is” deed, leaving the buyer with NO rights to sue the seller/grantor for any encumbrances or defects in title. ■■ Estoppel by Deed • MED 0 of 24 Exams Under the doctrine of estoppel by deed, if a grantor conveys title to real property by deed before he owns the property, the title will automatically vest in the grantee as soon as the grantor acquires title to the property. 0 exams ■■ Chain of Title and Wild Land Records • HIGH 3 of 24 Exams • The chain of title shows all transfers of title for a piece of real property. Transfers of real property are organized in public records under two indexes. One index is organized by the names of the grantors, and the other index is organized by the names of the grantees. If a land transfer is NOT recorded properly, it is considered “wild”. A wild deed, mortgage, or easement is effective between the parties, BUT it will not put subsequent purchasers on constructive notice because it’s outside the chain of title (it’s not discoverable in the land records). July 2011, Essay 4 Feb 2010, Essay 2 Feb 2009, Essay 4 ■■ Recording Statutes & Notice • MED 1 of 24 Exams At common law, if real property is transferred multiple times by the same grantor, whoever rightfully received the property first had valid title against the other transfers. Today, every state has enacted a recording statute altering the common law rule. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2011, Essay 4 200 11 REAL PROPERTY • Three types of recording statutes exist to protect those who record their interests in land. o In a notice statute jurisdiction, a subsequent bona fide purchaser will prevail over a prior grantee that failed to record. o In a race statute jurisdiction, whomever records first prevails (notice is irrelevant). o In a race-notice statute jurisdiction, a subsequent bona fide purchaser is protected ONLY IF he records before the prior grantee. ■■ Bona Fide Purchasers & The Shelter Rule • HIGH 4 of 24 Exams • A bona fide purchaser (BFP) is a person/entity who: (1) takes real property without notice (actual, inquiry, or constructive) of a prior conveyance; AND (2) pays valuable consideration. A person who receives land by gift (a donee) or by bequest (an heir/devisee) is NOT a bona fide purchaser because he did not pay valuable consideration for the property. However, if said person sells the property, the subsequent owner may be deemed a bona fide purchaser. o Notice may be actual, constructive, or on inquiry. A person has actual notice of information directly received (i.e. expressly told or language in the deed). A person is on constructive notice of any information that could have been obtained from an inspection of public land records (i.e. search of the grantor-grantee index). A person is on inquiry notice of information that would be revealed upon a reasonable inspection of the land. Under the shelter rule, a person who purchases from a bona fide purchaser (BFP) receives the same status and rights as the BFP. ■■ Owner by Adverse Possession vs. Purchasers • MED 1 of 24 Exams July 2011, Essay 4 Feb 2010, Essay 2 Feb 2009, Essay 4 July 2007, Essay 6 Subsequent Bona Fide Owners of property acquired through adverse possession are protected against recording statutes because they have no documents to record. Courts have held that a bona fide purchaser of a later conveyance from the prior record title owner CANNOT defeat title acquired under adverse possession, even if the land was not occupied at the time of the conveyance. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2007, Essay 6 201 11 REAL PROPERTY ■■ Deeds: • MED 0 of 5 Exams • ■■ Deeds: • MED 0 of 5 Exams • • Drafting, Review, and Negotiation of Closing Documents Generally, the grantor (seller) or the grantor’s real estate broker will hire an attorney to prepare the Deed to ensure that all of the requirements are met to convey title to the property. However, a party to the transaction may draft the Deed. The language of the Deed may be negotiated or modified by the agreement of the parties. Such modifications may include the acceptance of certain encumbrances on the land (i.e. waiver of an encumbrance for gas or electrical companies). 0 exams This topic was first testable on the Feb 2017 exam. Persons Authorized to Execute Real Estate Documents The grantor (seller) of the real property MUST sign the Deed. However, a grantor may designate an agent to sign the deed on his behalf (most states require that a power of attorney or similar writing be signed stating that the agent has the authority to sign a Deed or closing documents on behalf of the grantor). Generally, the grantee (buyer) is NOT required to sign the Deed. If an entity or business organization is the grantor, then authorized persons must sign the Deed on behalf of the entity (such as officers of a corporation or managing members of a limited liability company). The board or members of the entity may be required to pass a resolution approving the sale of real property if the sale constitutes all or substantially all of the entity’s assets. Generally, a witness or an acknowledgement (signing the Deed in front of a notary public) is NOT required for the Deed to be valid. However, an acknowledgement may be required by local law to record the Deed. 0 exams This topic was first testable on the Feb 2017 exam. J. Mortgages/Security Devices ■■ Mortgages & Requirements for a Valid Mortgage • MED 0 of 24 Exams • A mortgage is a security interest in real property intended to be collateral for repayment of a loan. The debtor is the mortgagor, and the lender is the mortgagee. To be valid, a mortgage must be: (1) in writing; (2) signed by the party to be charged; AND (3) reasonably identify the parties and the land. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 202 11 REAL PROPERTY ■■ Purchase Money Mortgage • MED 0 of 24 Exams • A purchase money mortgage is used by the buyer (the borrower) to purchase real property, and the seller is the lender who secures a mortgage on the property. The holder of a purchase money mortgage has priority over: (1) all claims and mortgages against the mortgagor prior to the purchase of the property; AND (2) all subsequent claims and mortgages, unless defeated by a recording statute. 0 exams ■■ Future-Advance Mortgage • HIGH 2 of 24 Exams • • A future advance mortgage is a loan in which the lender may provide future payments under the original loan (usually used in a construction loan context). The lender secures a mortgage on the real property for the entire amount of the loan, including future advances. Obligatory vs. Optional: Future advance loans are either obligatory or optional. It is obligatory if the lender has a duty to advance the funds regardless of the situation – there are no discretionary conditions. It is optional if the lender has discretion whether to make the future advances (i.e. a satisfactory-progress condition). Priority Over Other Creditors: o If the lender is obligated to make future payments, then ALL payments are deemed part of the original loan (whether or not disbursed yet) and have priority over subsequently filed liens. o If future payments are optional, then each payment must be analyzed separately. An advance will NOT take priority when: (1) the advance is made after another filed lien on the property; AND (2) the lender has notice of the lien. The majority view requires actual notice, while only constructive notice is required under the minority view. July 2018, Essay 3 Feb 2012, Essay 8 ■■ Deed of Trust • MED 0 of 24 Exams A deed of trust is similar to a mortgage (as it is a security interest in real property intended to be collateral for repayment of a loan), BUT it involves three parties: (1) the borrower (the purchaser of the property); (2) the lender; AND (3) a third-party trustee who holds title of the property until the loan is paid off. Once the loan is fully paid, the trustee must transfer title to the purchaser of the land. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 203 11 REAL PROPERTY ■■ Assumption & Transfer Subject to a Mortgage • MED 1 of 24 Exams • A mortgage assumption may be express or implied. o An express mortgage assumption occurs if there is an express agreement for the grantee to (1) take the real property, AND (2) continue making mortgage payments to the lender. o An implied mortgage assumption occurs if: (1) no express agreement exists; (2) the grantee pays the seller only the equity in the home; AND (3) the grantee continues to make payments to the lender on the balance of the mortgage. Only a few states allow for implied assumption (most states reject the approach). If a buyer takes real property subject to a seller’s mortgage, he is NOT personally liable on the mortgage. However, a duly recorded mortgage remains on the land, and the mortgagee may foreclose on the mortgage and sell the burdened property in a foreclosure sale. If a buyer takes real property and “assumes” the seller’s mortgage, the buyer will be primarily and personally liable on the mortgage, while the seller remains secondarily liable. ■■ Mortgages: Judgments • MED 1 of 24 Exams • • July 2013, Essay 8 Foreclosure, Order of Preference, and Deficiency Foreclosure destroys junior mortgages, in that any mortgage recorded after the mortgage being foreclosed on will be extinguished. However, all prior recorded mortgages are not affected. Proceeds from a sale are used to pay off debts in the following order: (1) attorney fees and expenses associated with the sale; (2) debts owed to mortgagee; and (3) any amount left to the mortgagor. A mortgagee (the lender) may seek a deficiency judgment against a mortgagor (the debtor) if the proceeds of the foreclosure sale are insufficient to satisfy the mortgage. Feb 2012, Essay 8 ■■ Transfer of a Mortgage Note • MED 0 of 24 Exams Some states require that the promissory note be assigned along with the mortgage. Other states hold that the note automatically follows a mortgage when it is properly assigned (even without notice to the mortgagor). However, a mortgagor is NOT liable to the assignee of the note (for any payments made to the assignor) if the mortgagor did not receive notice of the assignment. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 204 11 REAL PROPERTY K. Zoning ■■ Zoning Ordinances • MED 0 of 24 Exams Zoning ordinances and laws (land-use regulations that adversely affected real property interests) are allowed in instances when it reasonably protects the health, safety, morals, or general welfare of the community. ■■ Zoning Ordinances: • MED 0 of 24 Exams • • MED 1 of 24 Exams • Variances A variance is an exception to a zoning ordinance. Two types of variances exist: (i) a use variance; and (ii) an area variance. An application for a variance may be granted if: (1) the property owner shows she will suffer hardship because of the ordinance; AND (2) the variance will not damage or harm the public welfare. ■■ Zoning Ordinances: 0 exams 0 exams Previous Non-Conforming Use The doctrine of previous non-conforming use allows a landowner to continue to use his land in violation of a later enacted zoning law. Where the prior use of the land was originally legal, the subsequent enactment of a zoning law will NOT bar the continued use of the land as it was legally used before the law’s enactment. A non-conforming use will only be “grandfathered in” if it remains in use. If the use is NOT continuous, it may no longer be protected. The non-conforming use doctrine is meant to protect the prior investment in real property. Insubstantial changes and reasonable alterations to repair the property ARE PERMITTED. The enlargement, alteration, or extension of a nonconforming use that constitutes a substantial change IS PROHIBITED. July 2018, Essay 3 L. Conflict of Laws ■■ Choice of Law Rules: • MED 1 of 24 Exams Real Property Cases In cases involving the title to real property or a contract for the sale of real property, the laws of the state where the real property is located will generally govern (known as the situs rule), as states have a strong interest in actions that affect real property located within their state. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 1998, Essay 3 This topic was first testable for Real Property on the Feb. 2017 exam, but was previously tested in Conflict of Laws. 205 11 REAL PROPERTY Under the Restatement (First) approach, the laws of the state where the real property at issue is located (the situs) will always govern. o Under the Restatement (Second) approach, it is presumed that the state where the property is located has the most significant relationship to the action, and that law will govern the action. o Under the Interest Analysis approach, where the real property at issue is located (the situs) will generally govern, UNLESS another state has a greater interest in having its law applied. However, if real property is merely incidental to a contract (i.e. real estate brokerage contracts, mortgage agreements), then the conflict of laws rules for contracts must be used to determine the applicable law. o • © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 206 12 SECURED TRANSACTIONS UCC = Uniform Commercial Code A. Applicability & Scope of Article 9 of the UCC ■■ Article 9 of the UCC Governs Secured Transactions • HIGH 36 of 49 Exams Article 9 of the Uniform Commercial Code (UCC) governs any transaction regardless of its form that creates a security interest, including security interests in personal property, consignments, a sale of accounts, chattel paper, and promissory notes. ■■ Scope of Article 9 of the UCC: • HIGH 5 of 49 Exams • • MEE TIP State this rule at the beginning of your essay answer for any question concerning a secured transaction. All 36 Exams in which Secured Transactions was Tested. Substance Over Form Controls Article 9 of the Uniform Commercial Code (UCC) governs any transaction regardless of its form that creates a security interest. Substance over form controls, and how the parties classify the transaction is immaterial. Title to Collateral is Immaterial: Article 9 of the UCC applies to a security interest regardless of whether title to the collateral is in the name of the secured party. A seller CANNOT retain or reserve title to goods that have been delivered or shipped. Any attempt by a seller to retain or reserve title after a shipment/delivery to the buyer, is limited in effect to a reservation of a security interest. Lease vs. Security Interest: A transaction labeled as a “lease” may be deemed a security interest. Courts will consider the economic realities of the transaction, NOT the intent of the parties. A transaction labeled a “lease” creates a security interest if: (1) a commitment to make payments for a term exists; AND (2) either (a) the original term of the lease is equal to or greater than the remaining economic life of the goods; (b) the lessee must renew the lease for the remaining economic life of the goods (or is forced to take ownership); (c) the lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration; or (d) the lessee has an option to become the owner of the goods for no additional consideration. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2016, Essay 1 July 2012, Essay 5 July 2011, Essay 1 Feb 2010, Essay 1 July 2009, Essay 4 207 12 SECURED TRANSACTIONS B. Definitions ■■ Types of Collateral: Accounts • HIGH 4 of 49 Exams An “account” is a right to payment of a monetary obligation (whether or not earned by performance) for any of the following: (1) property that has been or is to be sold, leased, or otherwise disposed of; (2) services rendered; (3) a policy of insurance issued; (4) a secondary obligation incurred; (5) energy provided; (6) the use or hire of a vessel under a charter or other contract; (7) a debt arising out of the use of a credit card; OR (8) winnings in a lottery or other game of chance sponsored by a State. ■■ Types of Collateral: • LOW 1 of 49 Exams • HIGH 7 of 49 Exams • HIGH 8 of 49 Exams • July 2004, Essay 7 Feb 2008, Essay 7 Inventory “Inventory” means goods that: (a) are leased by a person as lessor; (b) are held by a person for sale/lease or to be given under a contract of service; (c) are given by a person under a contract of service; OR (d) consist of raw materials, work in process, or materials used or consumed in a business. Inventory DOES NOT include farm products or goods that are only being held for repair. ■■ Types of Collateral: Feb 2007, Essay 7 Deposit Accounts A “deposit account” is a demand, time, savings, or similar account maintained with a bank. This DOES NOT include investment property or accounts evidenced by an instrument. A deposit account can only be perfected by control. ■■ Types of Collateral: July 2017, Essay 3 Feb 2015, Essay 3 Feb 2015, Essay 3 July 2012, Essay 5 July 2011, Essay 1 Feb 2011, Essay 3 Feb 2010, Essay 1 Feb 2006, Essay 6 Feb 1995, Essay 7 Equipment “Equipment” consists of goods other than inventory, farm products, or consumer goods. “Goods” means all things that are movable when a security interest attaches, including fixtures, timber, the unborn young of animals, crops, and manufactured homes. Some states have a motor vehicle “certificate-of-title” statute, which requires that the security interest be noted on the title of vehicle for the interest to be perfected. In such states, merely filing a financing statement is insufficient to perfect the security interest. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 4 Feb 2015, Essay 3 July 2012, Essay 5 July 2011, Essay 1 July 2008, Essay 1 Feb 2008, Essay 7 Feb 2000, Essay 1 Feb 1995, Essay 7 208 12 SECURED TRANSACTIONS ■■ Types of Collateral: • HIGH Consumer Goods “Consumer goods” are those used or purchased primarily for personal, family, or household purposes. Feb 2013, Essay 4 Feb 2011, Essay 3 Feb 2005, Essay 6 Feb 2000, Essay 1 5 of 49 Exams Feb 1999, Essay 7 ■■ Types of Collateral: • HIGH 4 of 49 Exams “Proceeds” refer to the following property: (1) anything acquired upon the sale, lease, or other disposition of collateral; (2) anything collected/distributed on account of collateral; (3) rights arising out of collateral; (4) claims arising out of the loss, nonconformity, defect, or interference with the use of collateral (but only to the extent of the value of collateral); OR (5) insurance payable by reason of the loss/nonconformity, defects, or damage to the collateral (but only to the extent of the value of collateral and to the extent payable to the debtor or the secured party). A check given in exchange for secured goods is deemed to be “cash proceeds”. ■■ Types of Collateral: • MED 2 of 49 Exams • Proceeds July 2016, Essay 4 Feb 2016, Essay 1 July 2012, Essay 5 Feb 1996, Essay 6 Chattel Paper Chattel paper is a record (or records) that evidences both: (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. A monetary obligation is an obligation to pay money that is (a) secured by the goods, or (b) owed under a lease of the goods. It includes a monetary obligation with respect to software used in the goods. If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper. July 2016, Essay 4 Feb 1996, Essay 6 C. Attachment and Perfection ■■ Attachment and Perfection • HIGH 23 of 49 Exams Under Article 9 of the UCC, a creditor may properly obtain a security interest in collateral as a means to secure a loan given to a debtor. To obtain a valid security interest in collateral, the creditor MUST: (1) attach the collateral; AND (2) perfect its interest. Attachment secures the creditor’s rights in the debtor’s collateral, while perfection gives notice of the creditor’s rights in the collateral to other parties who may have claims to the same. A security interest CANNOT be perfected, unless it has first attached. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 2 July 2017, Essay 3 July 2016, Essay 4 Feb 2016, Essay 1 Feb 2015, Essay 3 Feb 2014, Essay 3 Feb 2013, Essay 4 July 2012, Essay 5 209 12 SECURED TRANSACTIONS • • Attachment requires: (1) that the creditor extend value to the debtor; (2) the debtor must have rights in the collateral; AND (3) one of the following: o (a) an authenticated record/security agreement memorializing the security interest;  The record/security agreement must (i) be authenticated by the debtor and (ii) reasonably identify the collateral. A supergeneric description of the collateral (i.e. “all the debtor’s assets” or “all the debtor’s personal property”) is not sufficient. o (b) the collateral is in the secured party’s possession pursuant to a security agreement; o (c) the collateral is a certificated security in registered form and the security certificate has been delivered to the secured party pursuant to a security agreement; OR o (d) the secured party has control of certain types of collateral (deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights) pursuant to a security agreement.  A Security Agreement is an agreement that creates or provides for a security interest. It may be an oral agreement, unless otherwise specified. Typically, Perfection is obtained by the creditor filing a financing statement with the Secretary of State that identifies the collateral and his security interest in it. Perfection may also be obtained by taking possession or control of the collateral that is providing the security interest. Consumer “purchase money security interests” are automatically perfected (filing a financing statement is not required). July 2011, Essay 1 Feb 2011, Essay 3 Feb 2010, Essay 1 July 2009, Essay 4 Feb 2008, Essay 7 Feb 2006, Essay 6 July 2005, Essay 3 Feb 2005, Essay 6 Feb 2004, Essay 5 July 2001, Essay 3 Feb 2000, Essay 1 July 1998, Essay 4 Feb 1996, Essay 6 July 1995, Essay 2 Feb 1995, Essay 7 ■■ Financing Statements • MED 3 of 49 Exams An effective financing statement must: (1) provide the name of the debtor and secured party; (2) indicate the collateral covered by the financing statement; AND (3) be filed by a person authorized by the debtor in an authenticated record, security agreement, or upon acquisition of the collateral. o If the debtor is a registered organization, a financing statement must provide the official registered name of the organization. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2008, Essay 7 Feb 2007, Essay 7 Feb 2004, Essay 5 210 12 SECURED TRANSACTIONS • A financing statement that substantially complies with the above requirements is effective. Minor errors or omissions will not render a statement ineffective UNLESS the errors or omissions make the statement seriously misleading. A financing statement that fails to sufficiently provide the name of the debtor is deemed seriously misleading UNLESS the statement would be discoverable in a search of the records of the filing office under the debtor’s correct name. ■■ No Interest Retained in a Payment Right Sold & Rights/Title with Respect to Creditors and Purchasers • LOW 1 of 49 Exams A debtor that has sold an account, chattel paper, payment intangible, or promissory note DOES NOT retain an interest in the collateral sold. HOWEVER, when determining the rights of creditors or 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. July 2017, Essay 3 ■■ Purchase Money Security Interests (PMSI’s) • HIGH 10 of 49 Exams • • When a creditor extends value to the debtor for the purpose of enabling the debtor to acquire rights in the collateral, a purchase money security interest (PMSI) arises. PMSI’s in consumer goods enjoy automatic perfection under Article 9 of the UCC, and the creditor need not file a financing statement to perfect his PMSI with respect to the debtor. The UCC gives special protection to PMSI holders in an effort to encourage lending to consumers. o Consumer goods are goods purchased primarily for the buyer’s personal, family, or household purposes. In a non-consumer goods transaction, if a person files a financing statement with respect to a PMSI before or within 20 days after the debtor receives delivery of the collateral, then the security interest takes priority over conflicting interests which arise between the time the security interest attaches and the time of filing. Feb 2016, Essay 1 Feb 2013, Essay 4 Feb 2011, Essay 3 July 2008, Essay 1 Feb 2006, Essay 6 Feb 2005, Essay 6 Feb 2002, Essay 2 July 2001, Essay 3 Feb 2000, Essay 1 Feb 1997, Essay 3 ■■ Automatic Perfection for Certain Assignment of Accounts • LOW 1 of 49 Exams Under Article 9 of the UCC, 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. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2007, Essay 7 211 12 SECURED TRANSACTIONS D. Validity of Security Agreements & Rights of Parties ■■ Security Interest in the Sale of Collateral & Identifiable Proceeds • HIGH 8 of 49 Exams • Generally, a security interest will continue despite any sale, lease, or other disposition of the collateral, UNLESS the secured party authorizes the disposition free of the security interest. Similarly, a security interest will NOT be deemed invalid because the debtor has the right (or ability) to use or dispose of the collateral. A security agreement is effective against purchasers of the collateral. A perfected security interest will attach to any identifiable proceeds from the disposition of collateral. However, the interest in proceeds will become unperfected on the 21st day after attachment to the same UNLESS: (a) the proceeds are identifiable cash proceeds; (b) the security interest in the proceeds is perfected (other than by perfection of the original collateral) when the security interest attaches to the proceeds or within 20 days thereafter; OR (c) if all of the following conditions are satisfied: (i) the original collateral was perfected under the general filing rule; (ii) the proceeds are collateral that may be perfected under the general rule; and (iii) the proceeds are not acquired with cash proceeds. July 2016, Essay 4 Feb 2016, Essay 1 Feb 2015, Essay 3 Feb 2014, Essay 3 Feb 2013, Essay 4 July 2012, Essay 5 Feb 2011, Essay 3 Feb 1997, Essay 3 ■■ Consignment • LOW 1 of 49 Exams • Under UCC Article 9, a consignment is a transaction in which: (1) a person delivers goods to a merchant for the purpose of sale; (2) the merchant deals in goods of that kind, is not an auctioneer, and is generally not known by his creditors to be substantially engaged in selling the goods of others; (3) the aggregate value of the goods is $1,000 or more at the time of each delivery; (4) the goods are not consumer goods immediately before delivery; AND (5) the transaction does not create a security interest. The consignee is deemed to have rights and title identical to those the consignor had concerning the goods for purposes of determining the rights of (i) the creditors of a consignee, and (ii) purchasers for value of goods from a consignee. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2006, Essay 6 212 12 SECURED TRANSACTIONS ■■ Control of a Deposit Account • LOW 1 of 49 Exams A deposit account can only be perfected by control. A secured party has “control” of a deposit account if: (a) the secured party is the bank where the deposit account is maintained; (b) the debtor, secured party, and bank have agreed in an authenticated record that the bank will comply with the secured party’s instructions for deposits without further consent by the debtor; OR (c) the secured party becomes the bank’s customer with respect to the deposit account. Feb 2008, Essay 7 ■■ Future Advances • MED A security agreement may provide that the collateral secures future advances (or that accounts are sold in connection with), whether or not the advances are mandatory. Feb 2002, Essay 2 Feb 1998, Essay 7 2 of 49 Exams E. Protection of a Buyer of Goods ■■ Transfers of Collateral & The Shelter Principle • MED 3 of 49 Exams • • A buyer receives ALL of the rights the seller had upon transfer of the goods, including all ownership or enforcement rights (except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased). Thus, a seller who did not have title to goods, cannot transfer title to the buyer (unless an exception applies, such as a buyer in the ordinary course of business). Under the Shelter Principle, if a buyer acquires property free of a security interest, then any subsequent transfer by the buyer to someone else is also free of the security interest. Feb 2016, Essay 1 Feb 2011, Essay 3 July 2000, Essay 6 ■■ Buyers in the Ordinary Course of Business • HIGH 9 of 49 Exams • Buyers in the ordinary course of business take free of a security interest created by the seller. Thus, if a person entrusts goods to a merchant who deals in goods of that kind, the merchant has 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). A buyer in ordinary course of business is a person that: (1) buys goods in good faith; (2) without knowledge that the sale violates the rights of another person in the goods; AND (3) in the ordinary course from a merchant (a person in the business of selling goods of that kind). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2016, Essay 1 Feb 2015, Essay 3 Feb 2014, Essay 3 Feb 2013, Essay 4 July 2012, Essay 5 Feb 2011, Essay 3 July 2001, Essay 3 Feb 1997, Essay 3 Feb 1996, Essay 6 213 12 SECURED TRANSACTIONS ■■ Consumer-to-Consumer Rule • MED 3 of 49 Exams • Under the 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 purchased the goods primarily for personal, family, or household purposes; AND (4) before the filing of a financing statement covering the goods. Consumer goods are goods purchased primarily for the buyer’s personal, family, or household purposes. Feb 2013, Essay 4 Feb 2011, Essay 3 MEE TIP F. Priorities ■■ Priority for Perfected Interests & Unperfected Interests • HIGH 18 of 49 Exams Feb 2016, Essay 1 • • • Perfected Interest vs. Unperfected Interest: A perfected security interest has priority over a conflicting unperfected security interest in the same collateral. Unperfected Interest vs. Unperfected Interest: When there are two competing unperfected security interests, the first to attach will prevail. Perfected Interest vs. Perfected Interest: The rule of “first in time, first in right” controls, which means that the first creditor to perfect by filing has priority. Under Article 9 of the UCC, a creditor generally achieves priority by perfecting his security interest before another party. Perfection involves: (1) giving value; AND (2) recording or putting other creditors on notice of the security interest by filing. Therefore, filing is a key element to perfecting the security interest. PMSI vs. Perfected/Unperfected Interest: A purchase money security interest (PMSI) in consumer goods enjoys automatic perfection under Article 9 of the UCC (the creditor doesn’t need to file a financing statement to perfect the interest). As such, a PMSI in consumer goods takes priority over another perfected or unperfected interest. For PMSI’s in non-consumer goods, a financing statement must be filed in order to perfect the interest; otherwise the security interest in unperfected. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 On the exam, apply the appropriate priority rule(s) depending on the types on interests involved (i.e. perfected, unperfected, judgment lien, etc.) July 2017, Essay 3 Feb 2014, Essay 3 July 2012, Essay 5 July 2011, Essay 1 Feb 2010, Essay 1 July 2009, Essay 4 July 2008, Essay 1 Feb 2008, Essay 7 Feb 2007, Essay 7 Feb 2006, Essay 6 Feb 2002, Essay 2 July 2001, Essay 3 Feb 2000, Essay 1 Feb 1998, Essay 7 Feb 1997, Essay 3 July 1996, Essay 6 Feb 1996, Essay 6 July 1995, Essay 2 214 12 SECURED TRANSACTIONS ■■ Priority of Liens Arising by Law • LOW 1 of 49 Exams A possessory lien on goods has priority over a security interest in the goods UNLESS the lien is created by a statute that expressly provides otherwise. A possessory lien is an interest (other than a security interest) that: (1) secures payment or performance of an obligation for services or materials furnished by a person in the ordinary course of the person’s 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. A mechanic’s lien is an example of a possessory lien. Feb 2008, Essay 7 ■■ Priority of Judgment Lien Creditors • HIGH 5 of 49 Exams • Judgment lien creditors have priority over conflicting security interests if the person became a lien creditor before the conflicting security interest 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. However, this rule does not apply to a security interest held by a buyer of accounts or a consignor. Feb 2019, Essay 2 Feb 2015, Essay 3 July 2012, Essay 5 Feb 2004, Essay 5 Feb 2002, Essay 2 ■■ Fixtures • MED 3 of 49 Exams • An ownership interest in real property has priority over conflicting security interests in fixtures. However, two major exceptions exist: o Exception # 1: A perfected purchase money security interest in fixtures has priority over a conflicting ownership interest if: (1) the debtor has an interest of record or is in possession of the real property; (2) the ownership interest arose before the goods became fixtures; AND (3) the purchase money security interest was perfected before the goods become fixtures or within 20 days thereafter. o Exception # 2: A fixture filing, which is the filing of a financing statement that: (1) covers goods that are or will become fixtures; AND (2) satisfies all general rules for financing statements (name of the debtor, name of the secured party or a representative, and indicate the collateral covered), plus the following: (i) state that it covers a fixture; (ii) be filed in the real property records; (iii) provide a 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). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 4 Feb 2005, Essay 6 July 1998, Essay 4 215 12 SECURED TRANSACTIONS G. Accessions ■■ Accessions & Commingling • LOW 1 of 49 Exams • Accessions are goods that are physically united with other goods, but continue to retain their separate identity. Generally, the security interest in the separate goods continues in the accession collateral. If a security interest is perfected when the collateral becomes an accession, the security interest remains perfected in the collateral. Commingling: When an accession is the result of two goods that are subject to different security interests, the general rules of priority determine which interest will continue in the accession. An exception applies for security interests perfected by compliance with the requirements of a certificate-of-title statute. These interests take priority over all others. July 2008, Essay 1 H. Secured Party’s Rights & Remedies Upon Default ■■ Secured Party’s Right to Take Possession of Collateral • HIGH 6 of 49 Exams • After default, a secured party may: (1) take possession of the collateral; AND (2) without removal, render equipment unusable and dispose of collateral on a debtor’s premises. The secured party may proceed either pursuant to: (a) judicial process; OR (b) without judicial process (if it proceeds without a breach of the peace). To determine whether repossession was peaceful courts examine: (i) where the repossession took place; (ii) who was present; and (iii) whether any protests were made. In general, breaking into locked property is a breach of the peace. July 2016, Essay 4 July 2009, Essay 4 July 2005, Essay 3 July 2003, Essay 6 July 2002, Essay 1 July 1998, Essay 4 ■■ Secured Party’s Right to Dispose of Collateral • HIGH 6 of 49 Exams • After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or in any commercially reasonable manner. A debtor is liable to the extent that the proceeds from the disposition are not sufficient to satisfy the debt owed. Notice: A secured party that disposes of collateral MUST send an authenticated notification of the disposition to the debtor and any secondary obligor. The secured party is liable for damages for failing to provide notice, even if the debtor had actual knowledge of the disposition. However, the notice requirement DOES NOT apply if the collateral: (a) is perishable; (b) threatens to decline speedily in value; or (c) is of a type customarily sold on a recognized market. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 2 July 2009, Essay 4 July 2006, Essay 7 July 2005, Essay 3 Feb 1999, Essay 7 July 1996, Essay 6 216 12 SECURED TRANSACTIONS • • • Disposition at Foreclosure Sale: The disposition of collateral at a foreclosure 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 fails to comply with the rules governing disposition. Commercially Reasonable Sale: Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms MUST be commercially reasonable. When deciding whether a sale is commercially reasonable, courts will consider all facts and circumstances (including the amount of advertising performed, normal commercial practices in disposing of the particular collateral, the length of time between the repossession and the sale, and the price obtained). No one factor is conclusive. o A disposition of collateral 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 the disposition; OR (c) in conformity with reasonable commercial practices among dealers in similar property. Secured Party’s Purchase of Collateral: Unless agreed otherwise, a secured party may purchase the collateral at: (a) a public sale; OR (b) a private sale only if the collateral is (i) of a kind that is customarily sold on a recognized market, or (ii) the subject of widely distributed standard price quotations. MEE TIP Apply any specific rules concerning a secured party’s right to dispose collateral, depending on the issue presented in the essay fact pattern. ■■ Right to Collect Directly from an Account Debtor • MED 3 of 49 Exams A secured party has the right to collect a debt directly from an account debtor (which is a person obligated on an account, chattel paper, or general intangible). Once the account debtor receives notification (authenticated by the assignor or assignee) of an assignment, the debtor can no longer discharge its obligation by payments to the assignor (the original account creditor). In such an instance, the account debtor can only discharge its obligation by payments to the assignee. After receipt of the notification, the debtor may request that the assignee produce proof of the assignment. If the assignee DOES NOT comply within a reasonable time after such request, the debtor may continue to discharge its obligation by payments to the assignor (the original account creditor). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 3 July 2004, Essay 7 July 2000, Essay 6 217 12 SECURED TRANSACTIONS I. Debtor’s Rights Upon Default ■■ Damages Available to a Debtor for a Secured Party’s Failure to Comply with Applicable Rules • HIGH 4 of 49 Exams • • • A secured party is liable for the debtor’s actual damages for the amount of any loss caused by their failure to comply with applicable rules concerning secured transactions. The damages for loss is generally equal to expectation damages, and may include loss resulting from the debtor’s inability to obtain (or increased costs of) alternative financing. In addition, irrespective of actual damages, a debtor may recover $500 in statutory damages for a secured party’s failure to comply with specific provisions of Article 9 of the UCC. A civil penalty is applied if the collateral is consumer goods, wherein a 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 amount of the obligation, or (b) the time-price differential, plus 10% of the cash price. Lastly, a court may order or restrain collection, enforcement, or a proper sale of collateral if a secured party is not proceeding in accordance with applicable rules. July 2006, Essay 7 Feb 2004, Essay 5 July 2003, Essay 6 Feb 1999, Essay 7 ■■ Debtor’s Right of Redemption • MED 2 of 49 Exams • A debtor has the right to repay obligations and reclaim property held by the secured party (known as redemption). To redeem collateral, a debtor must: (1) fulfill all obligations secured by the collateral; AND (2) pay reasonable expenses and attorney’s fees. A 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 for its disposition; OR (c) accepted collateral in full or partial satisfaction of the obligation it secures. July 2006, Essay 7 July 2003, Essay 6 ■■ Deficiency Judgments • HIGH 4 of 49 Exams • Under Article 9 of the UCC, the impact of non-compliance with Article 9 on recovery of a deficiency in a consumer goods transaction is left to the court to determine. Some states apply the absolute bar rule in which the secured party is barred from collecting any deficiency remaining after the disposition of collateral when the secured party fails to comply with applicable provisions for a disposition. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2006, Essay 7 July 2005, Essay 3 July 2003, Essay 6 Feb 1999, Essay 7 218 12 SECURED TRANSACTIONS • • Other states apply the rebuttable presumption rule. Under this rule, if the secured party fails to comply with applicable provisions for disposition, it is presumed that the proceeds from the disposition are equal to the debt owed. However, the presumption can be rebutted if the secured party shows that the debt owed is greater than the fair market value of the collateral at the time of disposition. For non-consumer transactions, Article 9 of the UCC provides that (1) if a debtor places a secured party’s compliance in issue, AND (2) a secured party fails to prove that the disposition was proper, then the amount recoverable in deficiency is limited to an amount by which the total debt exceeds the greater of: (a) the proceeds of the disposition; OR (b) the amount that would have been realized if the secured party complied with the applicable provisions. The amount of proceeds that would have been realized is equal to the total debt UNLESS the secured party proves that complying with the rules would have yielded a smaller amount. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 219 13 TORTS MEE TIP For any Torts essay question, assume the following: • Unless otherwise specified in the question, assume there is NO applicable statute. • Assume that survival actions and wrongful death claims are available. • Unless otherwise indicated, assume that the jurisdiction uses both: (i) joint and several liability; and (ii) pure comparative negligence. A. Intentional Torts ■■ Battery • HIGH 2 of 24 Exams • A defendant is liable for Battery when there is (1) an intentional, (2) harmful or offensive contact, (3) with the plaintiff’s person (including anything connected to the plaintiff). A defendant acts intentionally when he acts: (a) with the desire to bring about the harm/contact; OR (b) knowing that harm/contact is substantially certain to occur. Bodily harm is the physical pain, illness, or physical impairment to another’s body. A bodily contact is offensive if it offends a reasonable sense of personal dignity (analyzed under the reasonable person standard). A claim may be supported by nominal damages; plaintiff need not suffer actual damages. Feb 2011, Essay 4 Feb 2010, Essay 4 ■■ Assault • MED 0 of 24 Exams • • A defendant is liable for Assault when there is (1) an intentional act, (2) that causes the plaintiff to be placed in reasonable apprehension, (3) of imminent harmful or offensive contact with the plaintiff’s person. An act is deemed intentional if it is done: (a) for the purpose of causing such an apprehension; OR (b) with knowledge to a substantial certainty that such apprehension will result. The reasonable apprehension element requires the plaintiff to be BOTH: (i) aware of the defendant’s act; AND (ii) believe that the defendant is able to commit the act. A claim may be supported by nominal damages; plaintiff need not suffer actual damages. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 220 13 TORTS ■■ False Imprisonment • MED 1 of 24 Exams • A defendant is liable for False Imprisonment when he (1) intentionally acts, (2) to restrain plaintiff to fixed boundaries (one with no reasonable means of escape), AND (3) the plaintiff is conscious of the confinement or is harmed by it (the extent of the false imprisonment is generally not relevant). It is immaterial whether the act directly or indirectly causes the confinement. A defendant acts intentionally when he acts: (a) purposely to bring about the confinement; OR (b) knowing that confinement is substantially certain to occur. The restraint may be accomplished through threats, and DOES NOT need to be physical or stationary (only in one place). A claim may be supported by nominal damages; plaintiff need not suffer actual damages. Feb 2012, Essay 4 ■■ Intentional Infliction of Emotional Distress • MED 0 of 24 Exams • • A defendant is liable for Intentional Infliction of Emotional Distress if: (1) the defendant acted intentionally or recklessly; (2) the defendant’s conduct was extreme and outrageous (conduct that transcends all bounds of decency); (3) the defendant’s act caused extreme emotional distress (causation); AND (4) the plaintiff actually suffered severe emotional distress (damages). Where such conduct is directed at a third person, the defendant is liable if he intentionally or recklessly causes severe emotional distress: (a) to a member of such person’s immediate family who is present at the time (whether or not such distress results in bodily harm); OR (b) to any other person present, if such distress results in bodily harm. An act is intentional when: (a) the person desires to inflict severe emotional distress; OR (b) knows that such distress is certain or substantially certain to result from the conduct. An act is reckless if it’s a deliberate disregard of a high risk that emotional distress will follow. 0 exams ■■ Trespass to Land • MED 0 of 24 Exams A defendant is liable for the intentional tort of Trespass to Land if (1) he intentionally, (2) either (a) enters the land in the possession of another; (b) causes an object or a third person to enter the land of another; (c) remains on the land; or (d) fails to remove an object from the land that he is under a duty to remove. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 221 13 TORTS • • Intent to trespass is NOT required; the ONLY intent required is that the defendant intended to enter/remain on the subject land. The plaintiff must be a possessor of the land at the time the trespass takes place (i.e. owner or tenant). A claim may be supported by nominal damages; plaintiff need not suffer actual damages. If plaintiff suffers actual damages, he may recover either: (a) the decrease in value of the property; OR (b) the cost to repair the property. ■■ Trespass to Chattels & Conversion • MED 0 of 24 Exams • • A person is liable for Trespass to Chattels when he (1) intentionally interferes with another’s personal property (including damage or preventing a party from using the property), AND (2) the amount of damage is small. A person is liable for the tort of Conversion if the amount of interference is substantial, in which the converter is liable for the full market value of the chattel involved. o To determine if there is substantial interference, the court will consider the following factors: (i) extent and duration of dominion/control; (ii) intent to deprive the owner of possession; (iii) the tortfeasor’s good faith; (iv) extent and duration of resulting interference; (v) harm done to the chattel; and (vi) inconvenience and expense caused. Mistaken ownership of the property is NOT a defense to either tort. 0 exams ■■ Doctrine of Transferred Intent • MED 0 of 24 Exams • Under the Doctrine of Transferred Intent, the intent to harm one party can be transferred when: (1) the defendant had the intent to commit a tort against one particular individual; AND (2) if in the act of trying to accomplish that tort either (a) commits a different tort against that person or (b) another person is injured – whether by the same tort intended or a different tort that resulted. The doctrine of transferred intent only applies to the intentional torts of battery, assault, false imprisonment, trespass to land, and trespass to chattels. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 222 13 TORTS ■■ Intentional Tort Defenses: • HIGH 2 of 24 Exams Consent is a defense to intentional torts, and may be express or implied through words or conduct. Consent need not be communicated to the actor. Apparent consent is an effective defense when words or conduct are reasonably understood to be intended as consent, such as with customary practice or the person’s failure to object. Implied by law consent occurs under certain special circumstances, such as medical emergencies. However, the defendant’s actions CANNOT exceed the bounds of the consent given. The consenting party must have capacity, and consent may be withdrawn at any time. Some courts hold that a person cannot consent to a criminal act. ■■ Intentional Tort Defenses: • HIGH 2 of 24 Exams • • • • Consent Feb 2012, Essay 4 Feb 2011, Essay 4 Privileges Privilege is conduct that under ordinary circumstances would subject the actor to liability, but is excused under the circumstances. A privilege must be plead and proved by the defendant. Privilege includes the following defenses listed below. Necessity: A defendant is NOT liable for harm to the plaintiff’s real or personal property if defendant’s acts were (1) necessary (or reasonably appeared to be necessary), (2) to prevent serious harm to a person or property. Public necessity is when the defendant acts for the public good and is a complete defense. Private necessity is an incomplete privilege (the defendant will be liable for any damages caused unless the purpose of his acts were to help the plaintiff), and occurs when defendant is protecting his own or a few other’s property interests. Necessity is applicable only to intentional torts against property. Self-Defense/Defense of Others: A defendant is NOT liable for harm to the plaintiff if he: (1) reasonably believed that the plaintiff was going to harm him or another; AND (2) used reasonable force that was necessary to protect himself or another. Defense of Property: A person may use reasonable force to defend property, but CANNOT use deadly force. Recapture of Chattels: An owner of chattels wrongfully taken may take prompt action and use reasonable, non-deadly force to recover the chattels from the wrongdoer. No force is deemed reasonable until a demand for return has been made, UNLESS the demand would be dangerous or futile. This privilege is NOT applicable to recapture pertaining to a default in an installment contract for the sale of goods. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2012, Essay 4 Feb 2011, Essay 4 MEE TIP On the exam, apply only the applicable privilege(s) based on the essay question. 223 13 TORTS • • • Detain for Investigation: In most jurisdictions, shopkeepers have the privilege of (1) temporarily detaining, (2) a person reasonably suspected of theft, (3) in or near their store, (4) for the purpose of an investigation. Reasonable non-deadly force may be used to detain the individual, when a request to remain has been made and refused. Privilege to Discipline: Parents may use reasonable force in disciplining their children. Privilege to Arrest: A privilege to arrest is generally regulated by statute, but is more likely to occur when the crime is serious (a felony) and if the defendant directly observed the crime when making the arrest. B. Negligence ■■ Prima Facie Case of Negligence • HIGH 6 of 24 Exams A prima facie case for negligence requires: (1) a duty owed to the plaintiff by the defendant; (2) a breach of that duty; (3) the breach was the actual and proximate cause of the plaintiff’s injuries; AND (4) damages. To make a prima facie case, a party must offer sufficient evidence so that the trier of fact could reasonably find that ALL of the above elements have been met. MEE TIP State this rule at the beginning of your answer for any essay question concerning negligence. Feb 2019, Essay 1 July 2017, Essay 1 July 2015, Essay 1 Feb 2012, Essay 4 Feb 2010, Essay 4 Feb 2009, Essay 7 ■■ Affirmative Duty to Act & Rendering Aid • HIGH 2 of 24 Exams • Generally, there is NO duty to act affirmatively. However, an affirmative duty to act will arise in certain circumstances: (1) A pre-existing relationship between the parties (i.e. parent-child, landowner-entrant); (2) The defendant put the plaintiff in peril; (3) The defendant has undertaken to rescue the plaintiff; OR (4) A duty is imposed by law. A person who undertakes to rescue or aid another is liable for injuries caused by his failure to exercise reasonable care in doing so if: (a) the failure to exercise such care increases the risk of harm; OR (b) the harm is suffered because of the reliance on the person providing help or aid. Under this standard, a person who renders aid is liable for any bodily harm caused to the other person if: (1) aid is discontinued; AND (2) the other person is left in a worse position. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2015, Essay 1 July 2012, Essay 6 224 13 TORTS ■■ Standard of Care: • HIGH 5 of 24 Exams • Every person owes a duty to act as a reasonable prudent person would act under like circumstances. A reasonable prudent person takes appropriate measures to avoid foreseeable risks. This duty of care is owed to all foreseeable plaintiffs. Following community customs and statutory requirements may be relevant as to what conduct is reasonable, but are NOT dispositive. Statutory compliance DOES NOT establish reasonable care or freedom from fault; it is merely evidence of reasonable care. The reasonable person standard also applies to business entities. A person with a physical disability must act as a reasonable person with the disability would act. However, a person with below average intelligence or a mental disability must act as a reasonable person without the disability would act. ■■ Standard of Care: • HIGH 2 of 24 Exams • HIGH 2 of 24 Exams Feb 2019, Essay 1 July 2017, Essay 1 Feb 2012, Essay 4 Feb 2010, Essay 4 Feb 2009, Essay 7 Children Children are capable of negligence, but are held to a different standard than adults. Children are held to the standard of care of a hypothetical child of similar age, experience, and intelligence acting under similar circumstances. If a child is engaged in an adult activity, the child has a duty to act as a reasonable adult would under the circumstances with respect to that activity. Under the Restatement (Third) of Torts, the following are deemed adult activities: driving a car, tractor, motorcycle, or other motorized vehicle (such as motorbikes/scooters and snowmobiles). ■■ Standard of Care: • Reasonable Person Standard July 2015, Essay 1 Feb 2009, Essay 7 Professionals A professional (doctors, nurses, lawyers, accountants, engineers, architects, psychologist/psychotherapist) owes a duty to act with the knowledge and skill as an average member of that profession practicing in a similar community. One holding himself out as a specialist should be held to the standard of care and skill of the average member of the profession practicing the specialty, taking into account the advances in the profession. Expert testimony is generally required to show that the professional complied or breached the standard of care. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 3 July 2012, Essay 6 MEE TIP One the exam, apply any rules specific to the type of profession (i.e. doctor) if said profession is included in essay question. 225 13 TORTS • • A medical doctor is held to the degree of care and skill of the average qualified practitioner. Most courts analyze the doctor’s conduct under national standards rather than those in the doctor’s locality or community. A doctor has a duty to obtain informed consent from his patient before treatment, which requires the doctor to disclose risks of treatment that a reasonable patient would want to know. A psychologist/psychotherapist has a duty to warn potential victims when their patient makes a credible threat to others. In most states, a therapist will liable for a victim’s injury if (1) the therapist believed the patient posed a real risk, (2) of serious physical violence, (3) to a readily identifiable victim, and (4) the therapist failed to take steps to warn the victim. ■■ Standard of Care: • HIGH 2 of 24 Exams Land Owner/Possessor’s Duty to Entrants Some states require landowners to exercise reasonable care to ALL entrants upon his land to take appropriate measures to avoid foreseeable risks. Other states still determine what duty of care is owed by a landowner by considering the type of person (trespasser, licensee, or invitee) is on the property. The same rules apply to a possessor of land (i.e. a tenant or tenant business owner). o If the entrant is an Undiscovered Trespasser (one who enters the land of another without permission), in most jurisdictions, no duty is owed by the landowner. o If the entrant is an Anticipated Trespasser (one who enters the land of another without permission, but which may be expected by the landowner), the landowner must: (1) use reasonable care in operations on the property; AND (2) warn of (or make safe) highly dangerous artificial conditions that the landowner knows of.  Under the Attractive Nuisance Doctrine, a land owner/possessor owes a duty to child trespassers to make the premises reasonably safe or warn of hidden dangers on his land. A land owner/possessor is labile for the harm to a trespassing child if: (1) he knows (or should know) of a dangerous artificial condition on his land that is likely to cause death or serious bodily injury; (2) he knows (or should know) that children are likely to frequent the area; (3) children are unlikely to discover the condition or © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2015, Essay 1 Feb 2010, Essay 4 MEE TIP On the exam, apply the relevant landowner standard of care rule(s) based upon the injured person’s status in the essay question. 226 13 TORTS o o appreciate the risks involved; (4) the risk of harm outweighs the expense of making the condition safe; AND (5) he fails to exercise reasonable care in eliminating the danger or protecting children from it. The attractive nuisance doctrine is less likely to apply if the child engages in an adult activity. If the entrant is a Licensee (invited on the owner’s property as a social guest), the landowner must: (1) exercise reasonable care in operations on the property; AND (2) warn of (or make safe) dangerous conditions that are known to the landowner, but are not apparent to a guest. A person is a licensee if he reasonably believed, based on the owner’s conduct or words, that he was permitted to enter the owner’s land. If the entrant is an Invitee (invited onto the property for the owner’s benefit, such as a business), the landowner owes all the duties he would to a licensee. In addition, the landowner has a duty to make reasonable inspections of the property to find and make safe non-obvious dangerous conditions. A landowner is liable for failing to warn of dangerous conditions that would have been discovered upon reasonable inspection. ■■ Standard of Care: • MED 1 of 24 Exams • Landlord’s Duty to Tenants Unless otherwise provided by contract or law, a landlord generally has NO duty to maintain the leased premises. However, a landlord must warn the tenant of any latent defects. Under the common law, a landlord has NO duty to provide a safe premises so that tenants may be safe from criminal acts of third-persons. HOWEVER, modern courts have held that landlords have a duty to take reasonable precautions to protect tenants against foreseeable attacks. This has been applied to schools having a duty to protect tenant students from foreseeable criminal activity. July 2012, Essay 6 ■■ Negligence Per Se • HIGH 3 of 24 Exams Under the doctrine of negligence per se, a statute may be used to substitute the duty of care. If negligence per se applies, the duty and breach elements are established when the defendant breaches the statute. Then the plaintiff need only prove causation and damages. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 1 Feb 2015, Essay 1 Feb 2009, Essay 7 227 13 TORTS • • To use negligence per se, plaintiff must show: (1) that the statute’s purpose is to prevent the type of harm that the plaintiff has suffered; AND (2) that the plaintiff is in the class of persons the statute seeks to protect. There are two exceptions when the standard of care will NOT be substituted for the statute even when the above test is met. The first is when the defendant’s compliance with statute would have been more dangerous than the violation of it. The second is when compliance with the statute is impossible. ■■ Res Ipsa Loquitur • HIGH 2 of 24 Exams • • • • When the breach element of negligence is very difficult to prove, the court may allow a plaintiff to use the doctrine of “res ipsa loquitur” (which means the thing speaks for itself) to prove the breach element. Traditional Test: To be applicable, a plaintiff must show: (1) that her injury is of a sort that typically does not occur in the absence of negligence; (2) the instrumentality (thing/object) which caused her injury was in the defendant’s exclusive control; AND (3) that the plaintiff NOT cause or contribute to the injury. Restatement (Second) Test: Res Ipsa Loquitur is applicable when: (1) the event is of a kind that ordinarily does not occur in the absence of negligence; (2) other responsible causes are sufficiently eliminated by the evidence (including the conduct of the plaintiff and third persons); AND (3) the indicated negligence is within the scope of the defendant’s duty to the plaintiff. Plaintiff need not show that reasonable care would completely eliminate the risk; only that it ordinarily does not occur in the absence of negligence. Restatement (Third) Test: The factfinder may infer the defendant’s negligence when (1) the accident causing the plaintiff’s harm is a type that ordinarily happens as a result of the negligence of a class of actors, (2) of which the defendant is the relevant member. When an action is against multiple defendants, res ipsa loquitur generally CANNOT be used to show liability of any particular defendant. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 1 Feb 2008, Essay 2 MEE TIP Unless the essay question states otherwise, you may apply any one of the three Res Ipsa Loquitur tests: Traditional Test, Restatement (Second) Test, or Restatement (Third) Test. This occurred on the Feb. 2019 MEE (Essay 1, Point Three), in which the official analysis stated: “Answers relying on any of these variations should be given full credit…” 228 13 TORTS ■■ Causation: Actual and Proximate Cause • HIGH 6 of 24 Exams A plaintiff must show that the defendant’s conduct was BOTH the actual and proximate cause of the injury. Actual cause is the “but for” cause – but for defendant’s negligence, plaintiff would not have been injured. Under the Substantial Factor Test, something that is a substantial factor in bringing about the injury is an actual cause (even if the injury had multiple causes). Proximate cause is the legal cause, which means that the injury must have been a foreseeable result of the breach. A defendant is NOT liable for harms that are too remote from the defendant’s conduct. ■■ Proximate Cause: • HIGH 5 of 24 Exams • Feb 2019, Essay 1 July 2017, Essay 1 July 2015, Essay 1 July 2013, Essay 2 July 2012, Essay 6 Feb 2009, Essay 7 Intervening Causes Any act that occurs after the defendant’s breach that contributes to the harm is an intervening cause. Intervening causes that are dependent on (a natural reaction to) the defendant’s wrongful acts are usually foreseeable. If the intervening cause resulted in an unexpected injury to the plaintiff, it is usually deemed unforeseeable and will absolve the defendant of liability to the plaintiff. Intervening medical malpractice is ALWAYS deemed foreseeable. Intervening criminal acts are usually not foreseeable UNLESS: (a) the defendant should have anticipated the criminal act; OR (b) if the defendant’s conduct makes the criminal act more likely to occur. Courts have held that injuries sustained from a plaintiff running from the danger are foreseeable. Similarly, an injured rescuer’s injuries have been deemed foreseeable under the “danger invites rescue” doctrine. Feb 2019, Essay 1 July 2017, Essay 1 July 2013, Essay 2 July 2012, Essay 6 Feb 2009, Essay 7 ■■ Causation: Eggshell Plaintiff Rule & Emotional Distress Stemming from Physical Injury • HIGH 3 of 24 Exams • The Eggshell Plaintiff Rule means that a tortfeasor takes his victim as he finds him. Thus, a defendant is liable for ALL harm a plaintiff suffers as a result of his conduct, even if the plaintiff suffered from a preexisting mental or physical condition that made the harm different or greater than what a normal person might suffer. A plaintiff is entitled to recover any emotional distress damages stemming from a physical injury. However, a plaintiff will need to establish the tort of Negligent Infliction of Emotional Distress to recover mental distress damages not related to any physical injury. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2012, Essay 6 Feb 2011, Essay 4 Feb 2010, Essay 4 229 13 TORTS C. Defenses to Negligence Claims ■■ Comparative Negligence & Contributory Negligence • HIGH 2 of 24 Exams • • Under pure comparative negligence, the plaintiff’s negligence or assumption of risk will NOT bar recovery. However, it is a factor in determining the percentage of fault of each party, and will reduce the plaintiff’s recoverable damages by the percentage of his own fault. In a partial comparative negligence jurisdiction, if a plaintiff contributed less than 50% to his own injury, then his damages are reduced by the percentage of fault that is attributable to him. However, if the plaintiff contributed more than 50%, then the plaintiff’s claim is barred. In a contributory negligence jurisdiction, a plaintiff CANNOT recover damages if he contributed to his own injury. However, two exceptions to this rule exist: (a) when the defendant had the last opportunity to avoid the accident; OR (b) if the defendant was reckless. Contributory negligence is only applied in a few states. July 2015, Essay 1 Feb 2009, Essay 7 MEE TIP Unless otherwise indicated on the exam, only apply pure comparative negligence. Do not apply partial comparative negligence or contributory negligence unless instructed otherwise. ■■ Assumption of Risk • MED 0 of 24 Exams Assumption of risk is a defense to negligence, and applies if the plaintiff (1) voluntarily assumed (2) a known risk. The assumption of risk may be: (a) express – by agreement; OR (b) implied – where an average person would appreciate the risks involved. 0 exams D. Negligent Infliction of Emotional Distress ■■ Negligent Infliction of Emotional Distress • HIGH 2 of 24 Exams • Generally, there are three scenarios where a plaintiff may recover for negligent infliction of emotional distress: (a) a near miss case; (b) a bystander claim; or (c) in certain situations where a pre-existing relationship exists. In order to recover in a near miss case: (1) there must be negligence by the defendant, (2) which creates a foreseeable risk of physical injury, (3) the plaintiff must be in the zone of danger, AND (4) the plaintiff must manifest physical symptoms. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2012, Essay 4 Feb 2002, Essay 5 The Feb 2002 MEE (Essay 5) tested the subject of Family Law, but the tort law rule of Negligent Infliction of Emotional Distress was tested. 230 13 TORTS • • In order to recover in a bystander claim: (1) there must be negligence by the defendant; (2) the plaintiff must be a contemporaneous witness to a negligent bodily injury inflicted on a close family member (i.e. parent, child, spouse); AND (3) the plaintiff must manifest physical symptoms (some jurisdictions do not require this). A few jurisdictions require that the plaintiff be in the zone of danger to recover. The last scenario where a plaintiff can recover is where: (1) there is a pre-existing relationship between the plaintiff and defendant; AND (2) the negligent act can foreseeably cause distress. Recovery is rare, and is usually only available in egregious situations. E. Liability for Acts of Others (Vicarious Liability) ■■ Vicarious Liability of Employer: Superior • HIGH 5 of 49 Exams • • • Doctrine of Respondeat Under the doctrine of respondeat superior, an employer is vicariously liable for an employee’s negligent acts if the employee was acting within the scope of employment. An employee acts within the 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. Factors to determine if conduct is within the scope of employment include whether: (i) it is the kind the employee is employed to perform; (ii) it occurs substantially within the authorized time and space limits; and (iii) it is motivated (in whole or part) by a purpose to serve the employer. Additionally, conduct is within the scope of employment if it is of the same general nature as that authorized, or incidental to the conduct authorized. Conduct is NOT outside the scope of employment merely because an employee disregards the employer’s instructions. An employee’s act is NOT within the scope of employment when: (1) it occurs within an independent course of conduct; AND (2) is not intended by the employee to serve any purpose of the employer. An employee’s intentional torts are NOT generally within the scope of employment UNLESS the act: (a) was specifically authorized by the employer; (b) was driven by a desire to serve the employer; OR (c) was the result of naturally occurring friction from the type of employment. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2015, Essay 1 July 2013, Essay 2 Feb 2010, Essay 4 Feb 2006, Essay 2 Feb 2003, Essay 4 The Vicarious Liability rules have appeared on both Agency and Torts essays. As such, they are listed in both subjects, and the total number of exams (i.e. “x of 49 Exams”) for these rules are higher because they have been testable since February 1995. 231 13 TORTS ■■ Vicarious Liability of Employer: Superior Doctrine is Inapplicable • HIGH 2 of 49 Exams Liability Where Respondeat In certain situations, an employer can be held liable even if the doctrine of respondeat superior (an employer/employee relationship and conduct within the scope of employment) is inapplicable. Such situations include when: (a) the employer intended the conduct or consequences; (b) the employer was negligent or reckless in selecting, training, retaining, supervising, or controlling the employee; (c) the conduct involved an employer’s non-delegable duty to an injured person that it had a special relationship with; OR (d) the employee had apparent authority, the agent’s appearance of authority enabled the agent to commit the tort, and the thirdparty relied on that authority. Apparent authority is created when: (1) the employer holds the employee out as having authority; AND (2) the third-party reasonably believes the employee has authority to act. July 2013, Essay 2 Feb 2003, Essay 4 ■■ Employee vs. Independent Contractor • HIGH 5 of 49 Exams • • The determination of whether a person is an employee or an independent contractor centers on whether the principal had the right to control the manner and method in which the job is performed. An employee is an agent whom the employer controls (or has the right to control) the manner and means of the agent’s performance of work. An independent contractor is a person who contracts with another to do something for him, but who is not controlled nor subject to the other’s right to control with respect to his performance. The contractor may or may not be an agent. Generally, if the principal has substantial control in dictating the manner and method in which the job is performed, then the person is deemed to be an employee of the principal. In contrast, a person subject to less extensive control is considered an independent contractor. July 2017, Essay 1 Feb 2015, Essay 1 Feb 2006, Essay 2 July 2004, Essay 5 Feb 2003, Essay 4 ■■ Vicarious Liability for Acts of Independent Contractors • HIGH 2 of 49 Exams Generally, a principal is NOT vicariously liable for the torts of an independent contractor. However, there are several exceptions to the general rule. A principal will be liable for torts committed by an independent contractor if: (1) the independent contractor is engaged in an inherently hazardous activity; (2) the duty owed by the principal is non-delegable (i.e. the duty of care owed to an invitee); OR (3) through © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 1 July 2004, Essay 5 232 13 TORTS the doctrine of estoppel where the principal holds the independent contractor out as his agent to a third-party, the third-party reasonably relied on the care and skill of the contractor, and the third-party suffered harm as a result of the contractor’s lack of care or skill. F. Liability of Multiple Defendants ■■ Joint and Several Liability • MED 1 of 24 Exams In a jurisdiction permitting joint and several liability, if multiple defendants are the proximate cause of a single indivisible harm, then the plaintiff may recover the entire amount of his damages from any single defendant (but may not receive a double recovery). A defendant who pays more than his fair share of the damages may bring an action for contribution against the other defendants for the difference. Feb 2019, Essay 1 ■■ Indemnification • MED 1 of 24 Exams A defendant is entitled to indemnification (full reimbursement for damages paid to another party) when the defendant is a passive tortfeasor and seeks to assert his claim against an active tortfeasor. A defendant entitled to indemnification is entitled to recover the full amount he paid (or may have to pay) to the plaintiff from the active tortfeasor. Indemnification is generally available in situations of vicarious liability or when it is provided for by contract. Some states have limited an employer’s right to seek indemnification from employees in certain situations. Feb 2015, Essay 1 ■■ Contribution • MED 0 of 24 Exams Contribution is a theory of recovery when there are joint tortfeasors. Under joint and several liability, a plaintiff can recover 100% of the damages from any one of the joint tortfeasors. However, a joint tortfeasor may seek contribution from other joint tortfeasors if he pays more than his percentage share of liability. The amount that can be recovered in contribution is based on pure comparative fault, and a defendant cannot recover from another joint tortfeasor more than that tortfeasor’s percentage share of fault. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams Although this rule has not been tested to date, the concept of Contribution was discussed in the “Note” section of the Feb 2015 MEE (Essay 1, Point Four). 233 13 TORTS ■■ Doctrines of Alternative Liability, Joint Enterprise, & Market Share Liability • HIGH 2 of 24 Exams • • • Three doctrines exist that allow a jury to find multiple defendants liable even if the plaintiff cannot show which defendant’s conduct caused his injury. Doctrine of Alternative Liability: The doctrine of alternative liability allows the jury to find ALL defendants liable if (1) multiple defendants are negligent, (2) but it is unclear which one caused the plaintiff’s injuries. Doctrine of Joint Enterprise: The doctrine of joint venture or joint enterprise allows the negligence of one defendant to be imputed to the others if: (1) multiple defendants were engaged in a common project or enterprise; AND (2) all defendants have made an explicit or implied agreement to engage in tortious conduct. Doctrine of Market Share Liability: Market share liability is appropriate where the following factors are present: (1) all the named defendants are potential tortfeasors; (2) the allegedly harmful products are identical and share the same defective qualities (or were “fungible”); (3) the plaintiff is unable to identify which defendant caused her injury through no fault of her own; AND (4) substantially all of the manufacturers which created the defective products during the relevant time are named as defendants. If applicable, the manufacturers (of the product identical to the one which harmed the plaintiff) are liable in their proportion to their share of the market at the time plaintiff’s injury occurred, regardless of actual causation. The rationale for this theory is that each manufacturer’s liability would approximate its responsibility for the injuries caused by its own products. July 2016, Essay 3 Feb 2008, Essay 2 G. Economic & Dignitary Torts ■■ Defamation • MED 0 of 24 Exams 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 plaintiff made by the defendant, (3) publication by the defendant to a third party, AND (4) damages. A person CANNOT be found liable for defamation of a dead person. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 234 13 TORTS • • • • • For slander (an oral defamatory statement), the plaintiff ALWAYS needs to prove special damages (the actual damages suffered), unless the statement falls within one of the slander per se categories. If it does, then the plaintiff DOES NOT need to prove special damages, unless the defamatory nature of the statement is not clear on its face. o The four slander per se categories are: (a) impugning the business integrity or skill of the plaintiff; (b) a statement of unchastity about an unmarried woman; (c) a statement that the plaintiff has or had a loathsome disease; or (d) attributing to the plaintiff a crime of moral turpitude. For libel (defamation embodied in some permanent format), the plaintiff DOES 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 of the statement is not clear on its face. If the plaintiff is a public official or public figure (either having injected herself into a public controversy or having achieved widespread notoriety) there is a heightened standard to prove defamation, which requires the plaintiff to prove that the defendant spoke with either (a) recklessness as to the truth of the statement, or (b) with knowledge of its falsity. Negligence is insufficient to subject the speaker to liability. If the plaintiff is a private figure speaking about a matter of public concern, the plaintiff must also prove that the speaker was negligent. Defenses: Even if a defamatory statement has been published, a defendant will NOT be held liable if the defense of privilege applies. Absolute Privilege is a complete defense, and applies to statements made: in judicial proceedings, between spouses, by executive branch officials, and during legislative proceedings. Qualified Privilege (also referred to as Conditional Privilege) applies when: (1) the statement is conditionally privileged; AND (2) the privilege is not abused (the person did not act with malice). Qualified privilege applies to statements: by former/prospective employers when made in good faith and for a legitimate purpose; in governmental reports of official proceedings; during testimony in legislative proceedings; in self-defense; and to warn others about a harm or danger. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams A Constitutional Law question concerning defamation was tested on the July 2008 MEE (Essay 2, Point One), but Torts was not tested. Even though the question involved the tort of defamation, the rules tested were solely the free speech limits on defamation. Additionally, the bar examiners noted the subject area for the essay as “Constitutional Law”. 235 13 TORTS ■■ Invasion of Privacy Torts • MED 0 of 24 Exams • • • Misappropriation of name or picture occurs when the defendant (1) used the plaintiff’s name or likeness, (2) for the defendant’s commercial advantage (usually limited to promoting a product or service). Newsworthiness is a defense to misappropriation. False light occurs when the defendant (1) causes widespread dissemination, (2) of the plaintiff’s beliefs, thoughts, or actions, (3) in a false light, (4) that would be highly objectionable to a reasonable person. If a plaintiff is a public figure or involves a matter of public concern, the plaintiff MUST show actual malice (knowledge of the falsity or reckless disregard). Intrusion of privacy occurs when: (1) the defendant intrudes into the private affairs of the plaintiff; (2) a plaintiff has a reasonable expectation of privacy; AND (3) the intrusion is highly objectionable to a reasonable person (i.e. reading private mail, illegal wiretapping). Communication to a thirdparty of the private affairs is NOT needed for the claim to be actionable. Public disclosure of private facts occurs when the defendant (1) caused widespread dissemination, (2) of truthful private information, (3) that would be highly objectionable to a reasonable person. Newsworthiness is a defense unless actual malice is present. The defense of absolute privilege applies for information taken from official public documents. 0 exams ■■ Intentional Interference with Business Relations • MED 0 of 24 Exams • To state a prima facie case for intentional inference with business relations, a plaintiff must show that: (1) there was a contract or business expectancy; (2) the defendant knows of the contract/expectancy; (3) the defendant intentionally induces another party to breach the contract or terminate the relationship; (4) a breach occurs; AND (5) the plaintiff suffered damages. Defenses: A defendant may assert any of the following defenses to such a claim: Defense of legitimate competitive activity (no dishonest, wrongful, or illegal acts were used); Giving truthful information to another; Having a financial interest in the party that breached the contract or terminated the relationship; and Honestly giving requested advice (usually in the context of a “special relationship” such as attorney and client, parent and child, or clergy and penitent. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 236 13 TORTS ■■ Intentional & Negligent Misrepresentation • MED 0 of 24 Exams • • Intentional Misrepresentation: To state a prima facie case for intentional misrepresentation, a plaintiff must show: (1) misrepresentation of a material fact by the defendant; (2) the defendant knew that the statement was false (scienter); (3) intent of the defendant to induce the plaintiff; (4) actual and reasonable reliance by the plaintiff; AND (5) damages. Negligent Misrepresentation: To state a prima facie case for negligent misrepresentation, a plaintiff must show: (1) a misrepresentation (false statement of a material fact) by the defendant; (2) supplied for the guidance of others in a business transaction; (3) the defendant knew or should have known that the information was supplied to guide the plaintiff in his business transactions; (4) the defendant was negligent in obtaining or communicating the false information; (5) actual and reasonable reliance by the plaintiff, AND (6) the false information proximately caused plaintiff’s damages. Silence is generally NOT actionable. Generally, there is no duty to disclose information, UNLESS: (a) a fiduciary relationship exists; (b) it is necessary to correct an earlier mistake; (c) active concealment of a material fact occurs; OR (d) a person is selling real property and knows material facts that affect the value of the property (that the buyer is unaware of and cannot reasonably discover). 0 exams ■■ Public and Private Nuisance • MED 0 of 24 Exams • • A public nuisance is (1) an unreasonable interference, (2) with the health, safety, or property rights, (3) of the community. To recover damages, the injured party MUST show actual damages. To constitute a public nuisance, the nuisance must affect a considerable number of people or an entire community or neighborhood. A private nuisance is (1) a substantial and unreasonable interference, (2) with a person’s use or enjoyment of her property. The nuisance must be offensive, inconvenient, or annoying to a reasonable person. Plaintiff will be entitled to damages or an injunction to prevent the nuisance (if damages are insufficient). The primary defenses to the tort of nuisance are: (1) Coming to the Nuisance – a residential landowner knowingly came into a neighborhood with the nuisance; and (2) Statutory Compliance. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 0 exams 237 13 TORTS H. Common Law Strict Liability ■■ Strict Liability: • MED 0 of 24 Exams • Wild & Domestic Animals A owner of a domestic animal will NOT be strictly liable for harm caused by the animal UNLESS the owner has knowledge of the animal’s vicious propensities. Domestic animals include dogs, cats, and farm animals. However, an owner of a wild animal is subject to strict liability for harm caused by the animal, regardless of the safety precautions taken by the owner. An animal owner is strictly liable for the trespass and resulting property damage caused by his animals (if reasonably foreseeable). 0 exams ■■ Strict Liability: Abnormally Dangerous Activity • MED 1 of 24 Exams • A defendant is strictly liable for damages caused to a plaintiff when engaging in an abnormally dangerous activity (known as an ultrahazardous activity under the First Restatement). Under the Third Restatement, an abnormally dangerous activity is one 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 by all actors. Examples of an abnormally dangerous activity include blasting and the use of explosives. Courts are divided on classifying a legal fireworks display as abnormally dangerous – some courts have held that such displays create a significant risk of harm and are not a matter of common usage (similar to blasting), while other courts have held that the value to the community outweighs the dangerous attributes (which is a factor under the Second Restatement test). July 2017, Essay 1 MEE TIP Using only the Third Restatement test is sufficient when writing your essay answer for a Strict Liability – Abnormally Dangerous Activity issue. In the “Note” section of the official analysis for the July 2017 MEE (Essay 1, Point One), the examiners stated that “A good answer need not analyze each [Restatement] theory discussed above.” (emphasis added). I. Products Liability ■■ Strict Products Liability: Liability for Manufacturing Defect, Design Defect, & Failure to Warn • HIGH 3 of 24 Exams Under Strict Products Liability, a commercial supplier of a defective product is subject to strict liability for any harm caused by the product, regardless of any wrongdoing or negligence. A claim for strict products liability requires the plaintiff to show: (1) the product was defective (manufacturing defect, design defect, or failure to warn) when it left the hands of the manufacturer or seller; (2) the product was not altered when it reached the plaintiff; (3) the © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 3 Feb 2011, Essay 4 Feb 2008, Essay 2 238 13 TORTS • • • product caused an injury to plaintiff when it was being used in an intended or unintended foreseeable use; AND (4) the defendant is a commercial supplier who routinely deals in goods of this type. The plaintiff DOES NOT have to be a purchaser of the product to assert a claim for strict products liability (no privity is required). Damages for personal injuries and property damage may be recovered. Recovery solely for economic loss is NOT allowed. Proving that the product was defective is based upon one of three theories of strict products liability: (a) manufacturing defect, (b) failure to warn, OR (c) design defect. o Evidence of a manufacturing defect requires that (1) the product differs from the intended design (some defect in manufacturing/production); AND (2) it is more dangerous than if made properly. A harmful ingredient in a food product constitutes a defect if a reasonable consumer would not expect the food product to contain that ingredient. o Evidence of a failure to warn requires that (1) the plaintiff was not warned of the risks regarding use of the product, (2) which are not obvious to an ordinary user but known to the designer/manufacturer. A warning must be proportionate to the risk involved with normal use of the product. o A design defect exists if there was a way to build the product that: (1) is safer; (2) is more practical; AND (3) has a similar cost. When a design defect is alleged, the trier of fact (jury or court) must balance the alternative designs available (including their cost and effect on utility) against the risk to consumers. Definition of Commercial Supplier: A strict products liability suit may only be brought against a commercial seller or distributor of goods. A commercial seller or distributor is any person or entity who is engaged in the business of selling goods of the type (routinely sells such goods). Casual sellers and service providers are NOT commercial suppliers, and a strict products liability action CANNOT be maintained against them. Any commercial seller in the distribution chain (including a retailor or wholesaler) is deemed to be a commercial supplier, and a strict products liability action may be brought against them regardless if there is privity with the plaintiff. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP Three primary theories are available to hold a defendant liable for a product that causes harm: (1) Strict Products Liability; (2) Negligence; and (3) Breach of Warranty. If an essay question does not specify or point to which theory applies, then you must analyze the issues under ALL three products liability theories 239 13 TORTS ■■ Products Liability: • MED 1 of 24 Exams • • A negligence claim based on a defective product requires: (1) a duty owed to the plaintiff; (2) a breach of that duty; (3) causation (actual and proximate cause); AND (4) damages. Product suppliers (manufacturers, distributors, retailors, sellers) owe a duty to all foreseeable users of its products, and MUST act as a reasonably prudent supplier of the same type of product. A breach will be found when a supplier’s negligence results in the supply of a defective product. Suppliers are liable for ALL foreseeable misuses of their product; a misuse will only cut the chain of liability if it was not foreseeable. Any manufacturer or seller may be liable, BUT it must be shown that their conduct was negligent (i.e. caused the defect, their reasonable inspection of the product would have discovered the defect). Damages for personal injuries and property damage may be recovered. Recovery solely for economic loss is NOT allowed. ■■ Products Liability: • MED 1 of 24 Exams • Liability for Negligence July 2016, Essay 3 Liability for Breach of Warranty A products liability case may be based on a breach of express warranty or an implied warranty. o The 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. In such action, the only issue is whether the product was merchantable when sold (fault or how the product became unmerchantable is irrelevant). o An Implied Warranty of Fitness for a Particular Purpose is created when: (1) a seller knows or has reason to know of the buyer’s particular purpose for which the goods are required; AND (2) the buyer relies on the seller’s skill or judgment to select or furnish suitable goods. If the above elements are met, the goods MUST be fit for the particular purpose of the buyer, otherwise there is a breach of warranty. o A seller is liable for a breach of an Express Warranty she makes to a buyer. An express warranty is created when (1) a seller makes an affirmation of fact, promise, or description, or provides a sample, (2) which relates to the goods, and (3) it becomes part of the basis of the bargain. When a breach occurs, the seller may be held liable for any damages resulting from personal injury, property damage, and economic loss. Disclaimer of a warranty is usually not effective for a personal injury action. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2016, Essay 3 240 14 TRUSTS & FUTURE INTERESTS UTC = Uniform Trust Code UPC = Uniform Probate Code A. Trust Creation ■■ Trust Formation Elements • HIGH 7 of 49 Exams • • • • A valid express trust requires: (1) a definitive beneficiary (the beneficiary can be ascertained now or in the future); (2) a settlor with capacity; (3) an intent to create a trust; (4) a trustee; (5) a valid trust purpose; (6) trust property (the res); AND (7) compliance with any State formalities (i.e. signed in front of notary). o The same execution formalities for a will (i.e. two witnesses) are NOT required to create or amend a trust. Under the Uniform Trust Code, no execution formalities are required. Beneficiaries can be natural persons, corporations, or other organizations. Intent to create a trust may be established by a promise that creates enforceable rights in a person who (immediately or later) holds these rights as trustee. An oral promise supported by consideration is sufficient to create enforceable rights, unless the State requires certain trust formalities or the statute of frauds applies. The Trustee must have duties to perform, and the same person CANNOT be the sole trustee and sole beneficiary. Although a trust must have a named trustee, the trust will NOT fail solely because that person refuses to act as trustee, dies, is removed, or resigns. In such instance, the court will appoint a new trustee. A trust is not created until it receives valid property. The property interest does not need to be substantial, and does not have to be transferred contemporaneously with the signing of the trust instrument. A trust instrument signed during the settlor’s lifetime is valid even if the property was transferred to the trustee at a much later date, including after the settlor’s death (i.e. through a pour-over provision in a will). Feb 2013, Essay 8 Feb 2007, Essay 1 Feb 2006, Essay 1 July 2005, Essay 5 July 2004, Essay 1 July 2001, Essay 2 Feb 1997, Essay 7 ■■ Precatory Language & Promises to Create a Trust • MED 3 of 49 Exams Precatory language are words in a will or trust (such as “hope” or “request”) that merely express a settlor’s desire regarding the disposition of his property. Such words DO NOT create a legal obligation to act in accordance with that desire, and will not create a valid trust. Instead, there MUST be specific settlor intent. When there is a familial or fiduciary relationship between the parties, the court may presume the settlor intended to create a legal obligation. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2004, Essay 1 July 2001, Essay 2 Feb 1996, Essay 2 241 14 TRUSTS & FUTURE INTERESTS • Similarly, a promise to create a trust in the future is unenforceable UNLESS the promise is deemed to be a valid contract (mutual assent, consideration, and no defenses to formation). B. Types of Trusts ■■ Revocable & Irrevocable Trusts • HIGH 4 of 49 Exams • • The trust instrument may state whether the trust is irrevocable or revocable by the settlor. If no designation is set forth, then state law will govern whether the trust is revocable or irrevocable by default. The majority view is that trusts are irrevocable by default UNLESS expressly stated otherwise. Generally, an irrevocable trust CANNOT be modified or revoked by the settlor after its creation. The minority view and the Uniform Trust Code (UTC) provides that a trust is revocable by default UNLESS stated otherwise. Feb 2013, Essay 8 July 2012, Essay 1 July 2007, Essay 8 July 2002, Essay 7 ■■ Testamentary Trusts • LOW 1 of 49 Exams • A Testamentary Trust may be created through the provisions of a settlor’s will, and the trust does not take effect until the settlor’s death. In order to create a Testamentary Trust: (1) the will must state the essential trust terms (beneficiaries, purpose, and trust property); AND (2) intent to create a trust must be found from either (a) the express terms of the will, or (b) incorporation by reference of a document/writing in existence at the time the will was executed. Feb 2003, Essay 6 ■■ Pour-over Provision in a Will • HIGH 5 of 49 Exams • A pour-over provision in a will gifts property to a previously established trust. The property is distributed according to the terms of the trust. A pour-over will provision is distinguished from a testamentary trust because it does not create a trust. Instead, the pour-over will transfers property to a trust already in existence. As such, a pour-over will must be connected to an inter vivos trust (a trust made during the testator’s life). A testamentary disposition to an inter-vivos trust is valid, even if the trust instrument is amendable or revocable. But, that disposition shall be given effect in accordance with the terms of the trust instrument (including an amendment thereto) as it © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2013, Essay 8 July 2008, Essay 6 July 2002, Essay 7 Feb 2006, Essay 1 July 1997, Essay 2 242 14 TRUSTS & FUTURE INTERESTS appears on the date of the testator’s death. Unless otherwise provided in a will, a revocation or termination of the trust before the testator’s death causes the gift to lapse. ■■ Charitable Trusts • LOW 1 of 49 Exams • • A Charitable Trust is one created by a settlor to confer a substantial benefit to society. The beneficiary may be indefinite or contain a class of persons described by the trust. The rule against perpetuities DOES NOT apply to charitable trusts. A general charitable trust that fails to state a specific purpose or beneficiary will NOT fail. Instead, the court will select a purpose or beneficiary consistent with the settlor’s intent. When the trust names a specific charitable beneficiary, the trust will terminate upon that specified charity’s termination. However, if the settlor had a general charitable intent, the cy pres doctrine may be used to continue the trust consistent with that intent. July 1997, Essay 2 ■■ Illusory Trusts • LOW 1 of 49 Exams When the settlor retains significant control over the trust property indicating a lack of intent to create a trust (i.e. when a settlor retains a right of withdrawal or names himself as sole trustee), the trust will be deemed illusory and invalid. Feb 2015, Essay 6 ■■ Resulting Trusts • LOW If a trust fails for lack of a beneficiary, a Resulting Trust is implied by law, and all trust property returns to the settlor or the settlor’s estate. Feb 2007, Essay 2 1 of 49 Exams ■■ Discretionary Trusts • HIGH 5 of 49 Exams • A Discretionary Trust occurs when a trustee has absolute discretion and power to determine when and how much of the trust property is distributed to the beneficiaries of the trust. The trustee’s exercise of discretion MUST be in good faith. A court will generally not interfere with a trustee’s exercise of discretion, unless the trustee is abusing such power. Whether the trustee has abused their discretion depends on: (1) the terms of the trust instrument; and (2) the other duties of the trustee (such as the duty to administer the trust according to its terms, duty to act impartially, and duty of care). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 5 Feb 2011, Essay 1 July 2009, Essay 1 July 1999, Essay 1 July 1995, Essay 7 243 14 TRUSTS & FUTURE INTERESTS ■■ Support Trusts • MED 3 of 49 Exams • • A support trust is a trust that contains a provision directing the trustee to pay the beneficiary as much income and principal as is necessary for the beneficiary’s support. Support trusts may be pure (when the trustee has no discretion) or discretionary. If a discretionary support trust provision contains an ascertainable standard, a beneficiary may compel a trustee to make payments in accordance with that standard. A common ascertainable standard is one that provides for an individual’s health, education, support, or maintenance. The beneficiary may bring a judicial proceeding against the trustee for abuse of discretion when the trustee fails to make proper payments/distributions. Unless otherwise defined, the definition of support is fact dependent. It is measured by the lifestyle the beneficiary has been accustomed to, and includes more than just necessities and bare essentials. It ALWAYS includes: necessities (i.e. necessary food, shelter, clothing, and medical care); and reasonable amounts for child support. Feb 2019, Essay 5 July 2007, Essay 8 July 1995, Essay 7 C. How Trust Assets Pass ■■ How Trust Assets Pass • LOW 1 of 49 Exams Trust assets pass according to the terms of the trust. When a testamentary trust or distribution fails, the trust property passes: (a) under the residuary clause in a will; OR (b) to the settlor’s heirs by intestacy (if no applicable residuary clause). Feb 2015, Essay 6 D. Cy Pres Doctrine ■■ Cy Pres Doctrine • HIGH 6 of 49 Exams Cy pres is an equitable doctrine that applies to charitable bequests and charitable trusts. Courts will apply cy pres to modify a charitable trust to be consistent with and “as near as possible” with the settlor’s or testator’s intent, if the purpose of the trust or bequest is frustrated (the trust becomes unlawful, impracticable, impossible, or wasteful). The cy pres doctrine only applies if the testator had a general charitable intent. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2011, Essay 3 July 2009, Essay 1 Feb 2007, Essay 2 Feb 2000, Essay 4 July 1997, Essay 2 Feb 1996, Essay 7 244 14 TRUSTS & FUTURE INTERESTS • A settlor has general charitable intent when the settlor provides a particular charitable purpose, rather than naming a specific charity. The majority of courts and the Uniform Trust Code (UTC) will presume a general charitable intent. The absence of a reverter clause (that property will go to another beneficiary in the event that property cannot be used for the charitable purpose) is an indication of a general charitable intent. E. Restraints on Alienation & Rights of Creditors ■■ Spendthrift Trusts • HIGH 5 of 49 Exams • • • • A spendthrift provision in a trust (one preventing the transfer of a beneficiary’s interest) is valid only if it restrains both voluntary AND involuntary transfers. A spendthrift interest means that the interest CANNOT be sold or assigned by the income beneficiary, nor may any creditors reach it (but the creditor may attempt to collect directly from the beneficiary after a payment is made from the trust). However, there are five exceptions to this rule when a creditor CAN reach the beneficiary’s interest. They are: (1) a judgment creditor who has provided services for the protection of a beneficiary’s interest in the trust; (2) a creditor who furnishes necessities (i.e. necessary food, shelter, clothing, and medical care) – only some jurisdictions recognize this exception; (3) an order for child support or alimony; (4) any claim by the state or federal government (i.e. federal tax liens); or (5) a self-settled trust where the settlor retains an interest (i.e. a revocable trust). Spendthrift trusts DO NOT provide protection for mandatory distributions of trust property. A spendthrift provision DOES NOT prevent a beneficiary from reaching trust assets if the trustee abused his discretion in failing to make payments. Feb 2019, Essay 5 Feb 2006, Essay 1 Feb 2003, Essay 6 Feb 2001, Essay 6 Feb 1996, Essay 7 MEE TIP The rules of Spendthrift Trusts and the Rights of Creditors are usually tested together on essay questions. ■■ Rights of Creditors • HIGH 6 of 49 Exams If a beneficiary’s interest is not subject to a spendthrift provision, then the court may authorize a creditor to reach the beneficiary’s interest by attachment of present or future distributions to the beneficiary. If a beneficiary’s interest is subject to a spendthrift provision, a creditor is generally prohibited from attaching that interest, and may only attempt © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2019, Essay 5 Feb 2011, Essay 1 Feb 2007, Essay 1 Feb 2006, Essay 1 Feb 2003, Essay 6 Feb 2001, Essay 6 245 14 TRUSTS & FUTURE INTERESTS • • to collect directly from the beneficiary after a payment is made. If the debtor is a remainder beneficiary, the creditor will need to wait until the trust terminates to receive the trust property. Discretionary Trusts: Whether or not a trust contains a spendthrift provision, a creditor cannot compel a distribution to a beneficiary that is subject to the trustee’s discretion, even if: (a) the discretion is expressed in the form of a standard of distribution; OR (b) the trustee has abused their discretion. Discretionary Trusts & Spousal and Child Support: If a judgment or order exists against the beneficiary for unpaid spousal or child support, the court may order a distribution to satisfy the judgment and direct the trustee to pay the child, spouse, or former spouse an equitable amount of the judgment/order. F. Powers of Invasion ■■ Powers of Invasion • LOW 1 of 49 Exams • Invasion of Trust Principal: If a beneficiary will eventually receive trust principal, a court may permit invasion UNLESS the invasion would: (a) be contrary to the settlor’s intent; OR (b) adversely affect other beneficiaries. Express and 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 (through settlor’s words or conduct) power of invasion. A court may also permit invasion if it’s in the best interests of the beneficiaries or for the maintenance and support of the beneficiaries. July 1999, Essay 1 G. Modification of a Trust ■■ Modification of a Trust • MED 2 of 49 Exams Under the majority view, a trust may only be modified by a settlor: (a) who expressly reserved the power to modify the trust; OR (b) who has the power to revoke the trust (a power of revocation includes the power to amend). Under the minority view, a settlor is free to amend or revoke a trust without the express authority to do so (unless the trust states otherwise). Amendments must be made in writing and signed by the settlor. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 2 Feb 2013, Essay 8 246 14 TRUSTS & FUTURE INTERESTS • Under the Uniform Trust Code (UTC), a trust may be modified in the following instances: (1) by the settlor while alive, by a later will/codicil, or any other method manifesting clear and convincing evidence of the settlor’s intent (unless the trust instrument provides otherwise); (2) with the settlor and the beneficiaries consent (even if the modification is inconsistent with the trust purpose); (3) with the beneficiaries consent and the court determines that the modification is not inconsistent with the trust purpose; (4) modification will further the purposes of the trust because of circumstances not anticipated by the settlor; (5) the cy pres doctrine applies; (6) the court determines that the value of the trust property is insufficient to justify the cost of administration, and provides notice to all beneficiaries; and (7) it is necessary to conform to the settlor’s intent or tax objectives. o When determining the settlor’s intent, the court must consider: (1) terms and words of the trust; (2) the property involved; (3) the ability of ascertaining possible trust purposes, terms, and possible beneficiaries and their interests; (4) the interests or motives that could have reasonably influenced the settlor; and (5) the financial situation, dependencies, and expectations of the parties ■■ Equitable Deviation Doctrine & Modification of Administrative and Dispositive Trust Provisions • LOW 1 of 49 Exams • If continuing a trust on its existing terms would be impracticable or wasteful, courts may apply the Equitable Deviation Doctrine to modify the terms of the trust. The doctrine permits the court to modify the administrative provisions or procedures of a trust if modification would further the trust purpose because of circumstances not anticipated by the settlor. Under the common law, the equitable deviation doctrine only applied to modification of administrative provisions of a trust. However, under the Uniform Trust Code (UTC), dispositive provisions in a trust may be modified if modification will further the purposes of the trust when circumstances arise that were not anticipated by the settlor. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2011, Essay 3 247 14 TRUSTS & FUTURE INTERESTS ■■ Additions Clause in a Trust • LOW 1 of 49 Exams When the settlor anticipates changing trust assets, an additions clause should be added to the trust instrument. A trustee retains the specific power to accept or reject additions to the trust property from a settlor or any other person. July 2007, Essay 8 H. Termination of a Trust ■■ Termination of a Trust • HIGH 4 of 49 Exams Under the Uniform Trust Code (UTC), a trust may be terminated in the following instances: (1) it is revoked or expires pursuant to its terms (including the settlor revoking a revocable trust); (2) the material purpose of the trust has been achieved (a material purpose is a particular concern or objective of the settlor); (3) the trust has become unlawful, contrary to public policy, or impossible to achieve; (4) the settlor and all beneficiaries consent (even if termination is inconsistent with purpose of the trust); (5) all beneficiaries consent and the court decides that continuance is not necessary to achieve any purpose of the trust; (6) termination will further the purpose of the trust because of circumstances not anticipated by the settlor; (7) the court applies the cy pres doctrine to terminate the trust; or (8) the court or trustee determines that the value of the trust property is insufficient to justify the cost of administration. July 2015, Essay 6 July 2012, Essay 1 Feb 2003, Essay 6 July 1995, Essay 7 ■■ Distribution Upon Termination • LOW 1 of 49 Exams • Upon the occurrence of an event terminating or partially terminating a trust, the trustee shall proceed expeditiously to distribute the trust property to those entitled to it. The trustee may retain a reasonable reserve for the payment of debts, expenses, and taxes. The beneficiaries may decide how the trust property is to be distributed if the trust is terminated either by: (a) consent from the settlor and all beneficiaries; OR (b) by all beneficiaries, and a determination from the court. ■■ Conditions that Prohibit Marriage or Require Divorce • MED 2 of 49 Exams A condition on a gift in a will/trust that prohibits a first marriage or requires divorce are void as against public policy, and will be treated as though the restriction had not been imposed. However, a restraint on marriage may be upheld if: (a) it is a restraint on remarriage (i.e. a condition tied to the surviving spouse’s interest); OR (b) the language © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2012, Essay 1 July 2015, Essay 6 July 2012, Essay 1 This is a cross-over rule with Wills & Estates. It is listed in both subjects, as it has been tested in both the Wills and Trusts contexts. 248 14 TRUSTS & FUTURE INTERESTS of the bequest or gift indicates that its intended purpose is to take care of a person’s daily needs until they are able to obtain such support through marriage. I. Powers & Duties of Trustees ■■ Trustee Duty to Administer the Trust • HIGH • 5 of 49 Exams • • The trustee must continue to administer the trust until the trust terminates, and must hold the trust assets until the remaindermen are determined. Under the common law, the trustee owed beneficiaries the duty to act with care, skill, and prudence. Under the Uniform Trust Code, a 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. The trustee MUST exercise his powers in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries, even if the trust grants the trustee broad range of discretion (including the use of terms such as “absolute” or “uncontrolled”). Feb 2014, Essay 2 July 2012, Essay 1 July 2009, Essay 1 Feb 2008, Essay 9 July 1995, Essay 7 ■■ Trustee Duty of Care: Prudent Administration, Take Control & Protect Trust Property • LOW 1 of 49 Exams • Duty of Prudent Administration: A trustee must administer the trust as a prudent person would, by considering the purposes, terms, distributional requirements, and other circumstances of the trust. In order to satisfy this duty, a trustee must exercise reasonable care, skill, and caution. Duty to Take Control & Protect Trust Property: A trustee must also take reasonable steps to take control of AND protect the trust property. The failure to purchase fire/ casualty insurance for trust property is a breach of this duty, when insurance is customarily obtained by a prudent person. ■■ Trustee Duty of Loyalty: • HIGH 5 of 49 Exams July 2018, Essay 4 Self-Dealing A trustee must administer the trust solely in the interest of the beneficiaries and CANNOT engage in self-dealing. A transaction involving trust property that is entered into by the trustee for the trustee’s own benefit or that is affected by a conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary affected by the transaction. Alternatively, a beneficiary can seek a damages award for the trustee’s self-dealing. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2018, Essay 4 July 2015, Essay 6 July 2009, Essay 1 July 1998, Essay 7 Feb 1996, Essay 5 249 14 TRUSTS & FUTURE INTERESTS • Five exceptions to this rule exist: (1) if the transaction was authorized by the terms of the trust; (2) if the transaction was approved by the court; (3) the beneficiary did not commence a judicial proceeding within the required time; (4) the beneficiary consented to the conduct, ratified the transaction, or released the trustee of liability; OR (5) the transaction occurred before the person became trustee. ■■ Trustee Duty of Loyalty: • MED 2 of 49 Exams • • A transaction will be presumed to be affected by a conflict of interest if it is entered into by the trustee with: (a) the trustee’s spouse; (b) the trustee’s descendants, siblings, parents, or their spouses; (c) an agent or attorney of the trustee; OR (d) a corporation or other person or enterprise in which the trustee has an interest that might affect the trustee’s best judgment. Under the No Further Inquiry Rule, a transaction involving trust property entered into by the trustee for the trustee’s own benefit is automatically presumed to be a conflict of interest, and is voidable without further inquiry into the fairness of transaction or possible intent/motivation for selfdealing. It is immaterial whether the trustee acts in good faith or pays a fair consideration. For transactions involving trust property entered into with persons who have close business or personal ties with the trustee, this presumption may be rebutted if the trustee shows that the transaction was not affected by any conflict. ■■ Trustee Duty of Loyalty: • MED 3 of 49 Exams • LOW July 2018, Essay 4 Feb 2008, Essay 9 Duty to Act Impartially If a trust has two or more beneficiaries, the trustee MUST act impartially in investing, managing, and distributing the trust property – giving due regard to the beneficiaries’ respective interests. Impartiality means that the trustee CANNOT be influenced by his personal favoritism or animosity toward individual beneficiaries when administering the trust. ■■ Trustee Duty of Care: • Conflicts of Interest Feb 2019, Essay 5 July 2018, Essay 4 July 1998, Essay 7 Failure to Test the Market Failing to test the market for potential buyers before selling trust property (i.e. shares of a company) could result in a breach of the trustee’s duty of care. July 2015, Essay 6 1 of 49 Exams © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 250 14 TRUSTS & FUTURE INTERESTS ■■ Trustee Duty of Care: • HIGH 6 of 49 Exams • Investments & Prudent Investor Rule The Prudent Investor Rule requires that a trustee exercise the degree of care, skill, and prudence of a reasonable investor investing his own property. o This includes diversifying trust assets, avoiding risky investments, and the duty to monitor investments and sell and reinvest investments as necessary to keep the trust assets productive. In assessing whether a trustee has breached this duty, a court must consider a number of factors, including: (1) the distribution requirements of the trust; (2) general economic conditions; (3) the role the investment plays in relationship to the trust’s overall investment portfolio; and (4) the trust’s need for liquidity, regularity of income, and preservation or appreciation of capital. July 2015, Essay 6 Feb 2010, Essay 8 Feb 2008, Essay 9 Feb 2004, Essay 7 July 1998, Essay 7 July 1996, Essay 5 ■■ Delegation of Trustee Duties • LOW 1 of 49 Exams A trustee may delegate duties and powers that a prudent trustee of comparable skills could properly delegate under the circumstances. If the trustee delegates a duty, the trustee MUST exercise reasonable care, skill, and caution in: (1) selecting an agent; (2) establishing the scope and terms of the delegation; AND (3) periodically reviewing the agent’s actions in order to monitor the agent’s performance and compliance with the terms of the delegation. The trustee is NOT liable for actions of an agent if the trustee meets the above requirements. Feb 2004, Essay 7 ■■ Trustee Acting in Accordance with the Settlor’s Wishes • MED 2 of 49 Exams • If a trust is revocable, a trustee owes duties only to the settlor (during the settlor’s lifetime). Therefore, a trustee is NOT liable for breach of the trust if the trustee acted in accordance with the settlor’s wishes (even if to the exclusion of the other beneficiaries). If a trust is irrevocable, the trustee owes duties to settlor and the beneficiaries, and cannot be relieved from liability for acting in accordance with the settlor’s wishes. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2017, Essay 2 Feb 2010, Essay 8 251 14 TRUSTS & FUTURE INTERESTS ■■ Principal and Income Allocations • HIGH • 4 of 49 Exams • Trust receipts and disbursements are allocated according to State law either to income or principal. The following items MUST be allocated to income: (1) receipt of rental payments from real or personal property; (2) money received from an entity (i.e. cash dividends, interest on investments); and (3) ordinary expenses and repairs. The following items MUST be 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 – expenses/ repairs due to an unusual or unforeseen occurrence that is beyond the usual, customary, or regular kind. July 2018, Essay 4 Feb 2014, Essay 2 Feb 2001, Essay 6 July 1998, Essay 7 ■■ Damages for Wrongful Invasion of Trust Assets • LOW 1 of 49 Exams A trustee who wrongfully invades trust assets is liable to the beneficiaries affected for the greater of: (a) the amount required to restore the value of the trust property and distributions (to what it would have been if the breach did not occur); OR (b) any profit made by the trustee from the breach. July 1999, Essay 1 J. Future Interests ■■ Remainder Beneficiary of a Trust • HIGH Remainder beneficiaries (also known as remaindermen) are NOT entitled to receive trust property UNTIL the termination of the trust. ■■ Future Interests: • 1 of 49 Exams Feb 2014, Essay 2 July 2012, Essay 1 Feb 2003, Essay 6 4 of 49 Exams LOW July 2018, Essay 4 Representation of Remaindermen A minor, incapacitated, or unborn individual MAY be represented by and bound by a person with a substantially identical interest concerning a particular issue, UNLESS: (a) the person is already represented; OR (b) a conflict of interest exists between the representative and the person. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2012, Essay 1 252 14 TRUSTS & FUTURE INTERESTS ■■ Future Interests: • MED 2 of 49 Exams • 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) a state’s anti-lapse law applies to trusts. However, most states’ anti-lapse statutes DO NOT apply to trusts. Under the Uniform Probate Code (UPC), if a beneficiary of a future interest DOES NOT survive the distribution date, the following applies: (a) if the gift is not a class gift, a substitute gift is created in the deceased beneficiary’s surviving descendants who take the property the beneficiary would have received; OR (b) if the gift is a single generation class gift (i.e. “children”), a substitute gift is created in the surviving descendants of any deceased beneficiary. Each surviving beneficiary takes the property he would have been entitled to had all the beneficiaries survived the distribution date. Each deceased beneficiary’s surviving descendant takes the property the deceased beneficiary would have been entitled to. July 2008, Essay 6 July 2007, Essay 8 ■■ Vested Remainder Interest • MED 3 of 49 Exams • A vested remainder is an interest where there are no contingencies or conditions on survivorship. Vested remainders are devisable and will pass to that person’s heirs if they die before the interest becomes possessory. Under the common law, vested remainders will pass to a deceased remainder person’s heirs, UNLESS there is a survival condition in the trust. If the remainder person has no heirs, the interest passes to the remainder person’s estate. ■■ Vested Interests: • MED July 2018, Essay 4 Feb 2011, Essay 1 Feb 2010, Essay 8 Condition on Survivorship Under the common law, a condition of survivorship on future interests in a trust is NOT implied. However, under the Uniform Probate Code (UPC), such condition is implied. Feb 2011, Essay 1 July 2004, Essay 1 July 2002, Essay 7 3 of 49 Exams © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 253 14 TRUSTS & FUTURE INTERESTS ■■ Acceleration of Future Interests • MED 3 of 49 Exams A person’s future remainder interest may be accelerated (allowing the person to take possession immediately) if the present holder: (a) loses his legal right to the property; OR (b) disclaims his present interest in the property. If an income beneficiary disclaims his interest, the remainder beneficiaries are immediately entitled to the trust principal UNLESS: (a) distribution would harm one of the beneficiaries or potential beneficiaries (i.e. causing a class to close earlier); OR (b) the trust terms limit acceleration of a remainder interest. Feb 2014, Essay 2 Feb 2007, Essay 2 July 2001, Essay 2 K. Powers of Appointment ■■ Powers of Appointment • HIGH 4 of 49 Exams • • When a testator/settlor (the donor) gives another person the power to decide where and to whom the testator’s property will go, that person (the donee) has a power of appointment. A general power of appointment is granted when the testator DOES NOT leave any conditions or restrictions as to the appointment of the property. Thus, the donee is permitted to appoint the power to anyone, including himself. A testamentary power of appointment can only be exercised by the donee’s will and according to the donor’s conditions. The donee’s power is effectively exercised in an instrument only if: (1) the instrument is valid under state law; (2) the terms indicate the holder’s intent to exercise the power and are consistent with the conditions (if any) imposed by the testator; AND (3) the appointment is permissible. An appointment is permissible if it’s to a person or group authorized by the donor. In most states, a donee’s power is NOT exercised in a general residuary clause in a will UNLESS the donee’s intent to exercise the power is referenced. Intent to exercise the power is presumed in a blanket exercise clause (i.e. “All the residue and remainder of my estate, including any property over which I have a power of appointment, I devise to…”). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2009, Essay 9 July 2007, Essay 8 Feb 2002, Essay 4 Feb 1996, Essay 7 254 14 TRUSTS & FUTURE INTERESTS • • Under the Uniform Probate Code (UPC), absent a requirement that a power be expressly or specifically referenced, a general residuary clause expresses an intention to exercise a power of appointment held by the testator only if: (a) the testator’s will manifests an intention to include the 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. In some states and under the UPC, if the donor required the power be exercised by an express or specific reference, a blanket exercise clause is not sufficient to show intent to exercise the power, and additional evidence will be needed to prove the donee’s intent. ■■ Powers of Appointment: • MED 2 of 49 Exams A special power of appointment is one in which the donee (the holder of the power) may only appoint property to a limited class of persons authorized by the donor. The donor MUST indicate certain individuals or definite groups. The donee may make an appointment in any form, including one in trust. Appointments made to those NOT authorized by the donor are ineffective. The holder of a special power of appointment CANNOT appoint such property to himself, his estate, his creditors, or his estate’s creditors. ■■ Powers of Appointment: • MED 3 of 49 Exams Special Power of Appointment Feb 2017, Essay 2 July 2005, Essay 7 Ineffective Appointments Appointments made to those NOT authorized by the donor are ineffective. If more than one appointment is made at a time, an appointment that is ineffective will not affect an appointment that is valid. If the donee of a general power of appointment makes an ineffective appointment, the property passes to the taker-in-default designated by the donor of the power. If the donor did not provide for a taker-in-default, the property passes to the donee or the donee’s estate. Feb 2017, Essay 2 July 2005, Essay 7 Feb 1996, Essay 7 L. Rule Against Perpetuities ■■ Common Law Rule Against Perpetuities & Modern Modifications • HIGH 5 of 49 Exams © 2019 SmartBarPrep.com For an interest to be valid under the common law Rule Against Perpetuities (RAP), it must vest within a life in being at the time of the grant plus 21 years. This rule invalidates any interest that will not vest during the time period AND those that hypothetically may not vest within the time period. A class gift becomes vested under the RAP when (1) the class closes; AND (2) all conditions for every member of the class are satisfied. Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 4 Feb 2013, Essay 8 Feb 2004, Essay 7 July 2000, Essay 7 Feb 1996, Essay 7 255 14 TRUSTS & FUTURE INTERESTS • • Some states have modified the common law rule, and provide that a non-vested property interest is invalid ONLY IF it actually does not vest within 21 years after the death of a life in being at the time the interest was created. Rather than invalidate interests on the possibility that they will not vest, this approach waits to see if the interest will actually not vest. In addition, certain states have statutorily modified the common law rule such that the courts will reduce any age contingencies that violate the rule to 21 years. M. Construction Problems ■■ Class Gifts • HIGH • 9 of 49 Exams • • • A class gift is a gift to a group of persons described collectively (usually in terms of their familial relationship). Under the common law, the words of a testator/settlor were given their legal meaning. However, modern courts are more likely to consider the testator/settlor’s intent. The terms “children” and “issue” are interpreted in accordance with intestate succession rules. An adopted child inherits the same as a natural child when the adopted child is not the relative of the adopting parent. This applies to inheritance rights not only of the adopting parent, but the adopting parent’s family. Therefore, if a class gift is made to the issue or children of an adopting parent, the adoptive child will share in that gift as would a natural child of that parent. Class gifts generally close at the death of the testator/ settlor. Under the Rule of Convenience the class is closed when any member of the class is entitled to possession of the gift. When a gift to a class is involved, whether the gift to a predeceased member of the class will go into the residuary estate or be divided amongst the other class members depends on whether a group of persons is named (i.e. “my children”) or whether individual members of the class are specifically named (i.e. “Tom, Mary, and Joe”). When the class is specifically named, the gift will lapse and fall into the residuary estate unless an anti-lapse statute applies. When the class members are named as a group, the predeceased member’s share will be divided amongst the other members, unless there is a provision in the will to the contrary or an anti-lapse statute applies. A class gift may be based on a contingency. If so, remaindermen are entitled only to the gift if the specified conditions are satisfied. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 4 Feb 2014, Essay 2 July 2012, Essay 1 Feb 2011, Essay 1 Feb 2010, Essay 8 July 2008, Essay 6 July 2004, Essay 1 July 2000, Essay 7 Feb 1998, Essay 3 This is a cross-over rule with Wills & Estates. It is listed in both subjects, as it has been tested in both the Wills and Trusts contexts. 256 15 WILLS & ESTATES UPC = Uniform Probate Code Issue = a person’s lineal descendants A. Intestate Succession ■■ Intestate Succession • HIGH 9 of 49 Exams • • • • • Any property not passing by a valid will or by operation of law will be governed by a state’s applicable intestacy statute. If the decedent leaves only a surviving spouse and no issue, in most states the surviving spouse will receive the entire estate. However, some UPC states provide that a certain portion of the estate will be given to the decedent’s parents and their issue. If the decedent leaves a surviving spouse and issue (i.e. children, grandchildren), then in most states the surviving spouse will receive a certain portion of the estate (either a certain percentage or a certain amount plus a percentage) and the issue will take a certain percentage. Under the Uniform Probate Code (UPC), the surviving spouse will receive the entire estate if all issue are issue of the surviving spouse. If the decedent does not leave a surviving spouse, the estate passes to the decedent’s issue. If the decedent does not leave a spouse or issue, the estate passes to the decedent’s surviving parents equally or to one parent (if only one survives). If there are no surviving parents, then the estate passes to the issue of the decedent’s parents. In the majority of states, the distribution of intestate assets will be performed using the Per Capita at Each Generation approach. MEE TIP Pay attention to the essay question to see if the applicable intestacy statute is provided, as some exams have included the specific intestacy rules to apply. July 2012, Essay 9 Feb 2012, Essay 5 July 2009, Essay 9 Feb 2008, Essay 1 Feb 2006, Essay 7 July 2004, Essay 4 July 2001, Essay 4 July 2000, Essay 2 July 1995, Essay 1 B. Will Execution Requirements ■■ Will Execution Formalities • HIGH 7 of 49 Exams • A will is valid if the specific formalities provided by state law are followed. Most states require a will to be in a writing signed by the testator and witnessed by at least two individuals. Under the Uniform Probate Code (UPC), a will must be: (1) in writing; (2) signed by the testator (or by some other individual in the testator’s conscious presence and by the testator’s direction); AND (3) either (a) signed by at least two individuals within a reasonable time after witnessing the signing of the will or (b) notarized. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 4 Feb 2011, Essay 9 Feb 2004, Essay 1 July 2010, Essay 3 Feb 2003, Essay 1 Feb 2000, Essay 4 July 1998, Essay 1 257 15 WILLS & ESTATES • • A valid will requires intent by the testator to create the will. Thus, if it’s proven that the testator lacked testamentary intent, a will will be deemed invalid. Extrinsic evidence is admissible to prove intent. Under the majority view, a will is signed in the testator’s presence if it’s signed within the testator’s line of sight. Under the minority view and the UPC, a will is signed in the testator’s presence if it’s signed within the range of the testator’s senses. ■■ Will Execution Formalities: Compliance Doctrine • MED 2 of 49 Exams • Strict Compliance & Substantial Under the common law, a will is invalid if it does not meet all the requirements of the state’s law. Some states will find a will valid if the decedent substantially complied with the state’s requirements. Under the Uniform Probate Code’s harmless error rule, an improperly executed will still be valid if the party seeking to have it validated proves (1) by clear and convincing evidence, (2) that the decedent intended the writing to be his will. Generally, the greater the departure from the necessary execution formalities, the harder it is to prove the testator’s intent. Feb 2004, Essay 1 Feb 2003, Essay 1 ■■ Doctrine of Integration • LOW 1 of 49 Exams Under the 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. Thus, all pages of a will that are together when the last page is signed and witnessed are deemed to have been validly executed. Integration may be proven by extrinsic evidence or witness testimony. July 2010, Essay 3 ■■ Interested Witnesses • HIGH 4 of 49 Exams • Under the common law, the signing of the will must be witnessed by two disinterested witnesses (individuals who are not receiving a benefit under the will). However, most states provide for two exceptions in which the will remains valid despite being witnessed by an interested witness: (a) if the interested witness is an heir (any gift to that witness is reduced to their intestate share); OR (b) if another disinterested witness was present so that there were still a total two disinterested witnesses. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 4 July 2002, Essay 2 Feb 2001, Essay 1 Feb 2000, Essay 4 258 15 WILLS & ESTATES ■■ Codicils • HIGH 4 of 49 Exams A codicil is an instrument made after a will is executed that modifies, amends, or revokes a will. A codicil MUST satisfy the same formalities as a will to be valid. Execution of a codicil republishes the will, meaning courts will consider the original will to have been executed on the same date as the codicil. A validly executed codicil will cure any interested witness issues with the original will (as long as the codicil is witnessed by the requisite number of disinterested witnesses). Most courts hold that a codicil CANNOT republish an invalid will. July 2017, Essay 4 Feb 2012, Essay 5 July 2010, Essay 3 Feb 2003, Essay 1 ■■ Holographic Wills & Codicils • HIGH 5 of 49 Exams • A holographic will (or a written alteration to a will) is a handwritten will that is NOT witnessed. Not all states recognize holographic wills. In the states that do, some require that the writing also be signed by the testator. In the states that recognize holographic wills, a valid holographic codicil revokes any earlier valid will to the extent it conflicts with the codicil. July 2012, Essay 9 Feb 2011, Essay 9 July 2003, Essay 2 Feb 2000, Essay 4 July 2001, Essay 4 C. Incorporation by Reference & Acts of Independent Significance ■■ Incorporation by Reference • HIGH • 9 of 49 Exams • A bequest through an unattested document is valid if it meets the requirements to be incorporated into a will by reference. In most states, a document or writing may be incorporated into a will by reference if: (1) it was in existence at the time the will was executed; (2) it is sufficiently described in the will; AND (3) the testator intended to incorporate it into the will. The Uniform Probate Code (UPC) permits a document or writing bequeathing tangible personal property (other than money) to be incorporated into the will if it: (1) was signed by the testator; AND (2) describes with reasonable certainty the items and the devisees. Under the UPC, the document is NOT required to be in existence at the time the will is executed, and may be prepared after execution. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 4 Feb 2012, Essay 5 Feb 2011, Essay 9 July 2006, Essay 3 Feb 2006, Essay 1 Feb 2003, Essay 1 July 2002, Essay 7 July 2001, Essay 4 July 1996, Essay 3 259 15 WILLS & ESTATES ■■ Acts of Independent Significance • LOW A court may use an act of independent significance to fill in any gaps of a will. Acts of independent significance are those with significance outside of the will-making process. July 2006, Essay 3 1 of 49 Exams D. Revocation of a Will ■■ Revocation by Physical Act • HIGH 7 of 49 Exams • A will is revoked by physical act if: (1) the testator intended to revoke the will; AND (2) the will is burned, torn, destroyed, or cancelled by the testator (or someone at his direction and in his presence). Under the common law, words of cancellation are valid only if they come in physical contact with words of the will (i.e. written over). Under the Uniform Probate Code, words of cancellation are valid even if they did not physically contact the words of the will. Feb 2015, Essay 6 Feb 2005, Essay 5 July 2003, Essay 2 July 2001, Essay 4 July 2000, Essay 2 Feb 2000, Essay 4 July 1998, Essay 1 ■■ Revocation by Subsequent Will or Codicil • MED 3 of 49 Exams A testator may revoke a will by executing a subsequent valid will or codicil. Execution of a new will revokes a previous will only to the extent that the previous will conflicts with the new will UNLESS the new will expressly revokes the previous will in its entirety. July 2003, Essay 2 July 2001, Essay 4 July 1996, Essay 3 ■■ Dependent Relative Revocation Doctrine • HIGH 4 of 49 Exams The Dependent Relevant Revocation Doctrine (DRR) cancels a previous revocation that was made under a mistaken belief of law or fact by the testator. The doctrine applies when the testator would not have revoked his original will but for the mistaken belief that another will he prepared would be valid. When determining whether to apply DRR, courts will consider the testator’s intent by comparing the distributions with and without applying DRR, and decide which is closer to the testator’s intent. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2010, Essay 3 Feb 2005, Essay 5 July 2001, Essay 4 July 2000, Essay 2 260 15 WILLS & ESTATES E. Revival ■■ Revival of a Will • MED • 2 of 49 Exams • Under the common law, an earlier will was automatically revived if a subsequent will was revoked. Under the modern view, most states permit revival of revoked wills only under certain circumstances: (a) a will revoked by physical act will be revived if a testator shows intent for its revival; OR (b) a will revoked by subsequent instrument can be revived if the testator republishes the will by a subsequent will or codicil that complies with the will execution formalities. Under the Uniform Probate Code, if a will was only partially revoked by a subsequent instrument, the revoked provisions will automatically be revived UNLESS the testator did not intend their revival. Feb 2005, Essay 5 July 2000, Essay 2 F. Contractual Wills ■■ Contractual Wills • MED 3 of 49 Exams • In most states, contracts to execute mutual wills are enforceable. To be enforceable, the agreement MUST expressly state that the parties intend their wills to be a binding contract between them. There must be a specific reference to the contract upon which the joint wills are based and there must be specific, express intent that the parties desire the contract. If a party breaches a valid agreement to execute mutual wills, a court will probate the new will and then impose a constructive trust in favor of the original intended beneficiaries under the contractual will. The execution of a joint will or mutual wills DOES NOT create a presumption of a contract not to revoke a will. The Uniform Probate Code does not address revocation of contractual wills, but some states recognize revocation if there is sufficient notice before one of the parties dies. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2006, Essay 3 Feb 2000, Essay 4 July 1996, Essay 3 261 15 WILLS & ESTATES G. Distribution of Property ■■ Will Takes Effect at the Time of Death • MED 2 of 49 Exams The terms of a will determine how the testator’s assets are distributed. A will takes effect at the time of testator’s death, and the estate is comprised of the property owned by the testator at the time of death. For distribution purposes, a will is treated as if it was executed immediately before the testator’s death. A beneficiary listed in a person’s will DOES NOT have any interest in the estate property prior to that person’s death. July 2017, Essay 4 July 2006, Essay 3 ■■ Per Capita at Each Generation Distribution • LOW 1 of 49 Exams When assets are distributed by Per Capita at Each Generation, the estate is divided into as many equal shares as (1) surviving descendants in the generation nearest to the decedent, and (2) deceased descendants in that same generation who left surviving descendants (if any). Each surviving descendant in the nearest generation is allocated one share. The remaining shares, if any, are combined, and then divided in the same manner among the surviving descendants of the deceased descendants. This method provides equal shares to those in the same generation. Feb 2006, Essay 7 ■■ Modern Per Stirpes (Per Capita by Representation) Distribution • LOW 1 of 49 Exams Under Modern Per Stirpes (also known as per capita by representation), the estate is divided into as many equal shares as there are (1) surviving descendants in the generation nearest to the decedent, and (2) deceased descendants in that same generation who left surviving descendants (if any). Each surviving descendant in the nearest generation is allocated one share. The remaining shares, if any, drop down and are divided in the same manner among the then living issue of the deceased descendants. July 1995, Essay 1 ■■ Per Stirpes Distribution • MED 2 of 49 Exams Per stirpes means that each branch of the family is to receive an equal share of an estate. Under a per stirpes distribution, the assets should be divided at the first generation of which there are living takers. Each living and non-living person in that generation is entitled to one share. Those shares going to non-living persons drop down directly to their issue. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2006, Essay 7 July 1995, Essay 1 262 15 WILLS & ESTATES H. Construction Problems ■■ Generically Described Property • LOW 1 of 49 Exams Generically described property gifted in a will 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 the testator’s death, regardless of the specific item that was owned at the time of execution of the will (i.e. a different model boat). Feb 2009, Essay 3 ■■ Advancements/Satisfaction • HIGH 5 of 49 Exams • At common law, gifts to heirs during a testator’s lifetime were considered advancements on the heir’s intestate share of the estate, and would be deducted from the heir’s share of the estate. Under the modern view and Uniform Probate Code, gifts to heirs during a testator’s lifetime are NOT deemed advancements UNLESS: (a) the will provides for deduction of the gift; OR (b) it was indicated in writing that the property was in satisfaction of a devise or that its value will be deducted from the value of the devise. Some states DO NOT require a writing, and any evidence of the testator’s intent may be considered. Feb 2007, Essay 5 Feb 2006, Essay 7 July 2004, Essay 4 July 2000, Essay 2 July 1999, Essay 6 ■■ Simultaneous Death • MED 2 of 49 Exams The Revised Uniform Simultaneous Death Act (RUSDA) provides that if there is 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. Thus, it is presumed that each person outlived the other when distributing their estate. If RUSDA applies and two deceased people owned property as joint tenants, RUSDA creates a fiction that the rights of survivorship are severed and the property passes as if the two people held the property as tenants in common. July 2004, Essay 4 Feb 1997, Essay 1 ■■ Residue of a Residue Approach • MED 2 of 49 Exams At common law, there was no residue of a residue rule. Any residuary shares of a decedent’s estate that were invalid, passed to the testator’s heirs via intestate distribution. Under the modern view, if the residue is devised to two or more persons, any residuary beneficiary’s share that fails will pass to the other residuary beneficiaries. This rule only applies if the anti-lapse statute does not produce a substitute taker for a beneficiary who fails to survive the testator. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2008, Essay 1 Feb 1997, Essay 1 263 15 WILLS & ESTATES ■■ Conditions that Prohibit Marriage or Require Divorce • MED 2 of 49 Exams A condition on a gift in a will/trust that prohibits a first marriage or requires divorce are void as against public policy, and will be treated as though the restriction had not been imposed. However, a restraint on marriage may be upheld if: (a) it is a restraint on remarriage (i.e. a condition tied to the surviving spouse’s interest); OR (b) the language of the devise or bequest indicates that its intended purpose is to take care of a person’s daily needs until they are able to obtain such support through marriage. July 2015, Essay 6 July 2012, Essay 1 This is a cross-over rule with Trusts & Future Interests. It is listed in both subjects, as it has been tested in both the Wills and Trusts contexts. ■■ Wills Provisions Governing when the Testator Dies With or Without Issue • LOW 1 of 49 Exams When a testator/grantor includes a provision to govern his property in the event he dies without issue, but fails to include a provision regarding his death in the event he dies with issue, some courts infer a gift to issue. However, other courts hold that the gift fails and passes to the testator/grantor’s estate. July 2001, Essay 2 ■■ Lapsed Gifts & Anti-Lapse Statutes • HIGH 5 of 49 Exams • Under the common law rule of lapse, all gifts in a will were conditioned on the beneficiary surviving the testator. Any gifts to beneficiaries who did not survive the testator failed and passed to the residuary estate or under intestacy. However, a gift to a deceased beneficiary will NOT lapse if an anti-lapse statute applies. The anti-lapse statute provides that, where a beneficiary under a will predeceases the testator, the gift will vest in the issue of that predeceased beneficiary if: (1) the predeceased beneficiary is a specified descendant of the testator (specified by statute); AND (2) the beneficiary leaves issue who survive the testator. Under the Uniform Probate Code, the anti-lapse rule applies to gifts to issue (i.e. children, grandchildren), stepchildren, grandparents, and grandparent’s issue (i.e. siblings). Feb 2011, Essay 9 July 2005, Essay 1 July 2000, Essay 2 Feb 1999, Essay 3 Feb 1997, Essay 1 ■■ Ademption • HIGH 6 of 49 Exams Under the common law identity theory, a specific gift is adeemed by extinction if it cannot be identified at the time of the testator’s death or the testator does not own it at the time of death. This can occur when the testator makes a specific gift, but the property is later destroyed or sold before their death. The testator’s intent is not relevant. In most jurisdictions today, a specific gift will adeem only if the testator intended the gift to fail. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2012, Essay 5 Feb 2009, Essay 3 Feb 2005, Essay 5 Feb 2003, Essay 1 Feb 2002, Essay 4 July 1995, Essay 1 264 15 WILLS & ESTATES • If the testator DID NOT intend for a specific gift to fail, the beneficiary is entitled to: (a) any real property or tangible personal property (owned by the testator at death) which the testator acquired as a replacement for the specific gift; OR (b) a monetary devise equal to the value of the specific gift. Additionally, if the specific gift was destroyed, the beneficiary is entitled to any unpaid insurance recovery or other recovery for injury to the property. ■■ Stock Splits and Dividends • MED A person who was gifted securities (shares of stock) in a will is entitled to additional shares owned by the testator that were acquired as the result of stock splits or stock dividends. Feb 2012, Essay 5 Feb 2009, Essay 3 Feb 2007, Essay 5 3 of 49 Exams ■■ Exoneration • LOW 1 of 49 Exams Under the common law, a specific devise of real property DID NOT pass subject to any mortgage, and the mortgage was paid from the estate. Under the modern view, a specific devisee of real property assumes the mortgage (unless explicitly stated otherwise), regardless of a general directive in the will to pay debts. Feb 2002, Essay 4 ■■ Abatement • HIGH 4 of 49 Exams If there are more creditor’s claims against an estate than there are assets to cover all of the gifts made under the will, the gifts under the will abate (be reduced). Abatement is not giving effect to bequests in the will so that creditors’ claims against the estate can be satisfied. Creditors of the estate always have priority to assets of the estate over beneficiaries. Absent provisions in the will, the order in which a testator’s property abates is as follows: (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 category. Abatement within each category is in proportion to the amounts of property each of the beneficiaries would have received. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2011, Essay 9 Feb 2007, Essay 5 Feb 2001, Essay 1 Feb 1999, Essay 3 265 15 WILLS & ESTATES ■■ Slayer Statutes • HIGH 4 of 49 Exams • An individual who feloniously and intentionally kills the decedent forfeits all benefits and entitlements to the decedent’s estate. If the decedent dies intestate, the estate passes as if the killer disclaimed her intestate share. A conviction (after all appeals are exhausted) is conclusive of a felonious and intentional killing. Otherwise, it may be based on a preponderance of the evidence proved during a probate or related court proceeding. Modern precedent holds that a state’s slayer statute DOES NOT apply to a person acting as an agent under a durable health-care directive when withholding treatment to the decedent, as withholding treatment is NOT considered to be the cause of death. However, this issue is unresolved, and there is still an argument that a slayer statute may bar recovery from a decedent’s estate in such instance. Feb 2016, Essay 5 Feb 2012, Essay 5 Feb 2006, Essay 7 Feb 1997, Essay 1 ■■ Disclaimers • HIGH 6 of 49 Exams • • A disclaimer is when a person renounces their 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. Under common law, a disclaimer must be made within a reasonable time. Some states require a disclaimer to be made within 9 months of (a) the death of the decedent, or (b) the vesting of a future interest. Under the Uniform Probate Code, and a disclaimer may be made at any time, so long as the disclaimer is not barred (a person is barred from disclaiming an interest if he accepts or transfers the interest). If an interest is disclaimed, it either: (a) passes according to any applicable terms of the will/trust; OR (b) as if the person had predeceased the testator. If the interest passes as if the person predeceased the testator, the gift will lapse unless an anti-lapse statute is applicable. Feb 2014, Essay 2 Feb 2010, Essay 8 Feb 2009, Essay 3 Feb 2007, Essay 5 July 2000, Essay 2 Feb 1999, Essay 3 ■■ Divorce Revokes Testamentary Provisions to a Former Spouse • HIGH 4 of 49 Exams In all states, a final divorce decree revokes any disposition or appointment of property made to the former spouse in a prior made will. In some states, a bequest is revoked if divorce proceedings are pending. All provisions that are revoked are treated as if the former spouse had predeceased the testator. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2013, Essay 9 Feb 2001, Essay 1 Feb 1996, Essay 2 July 1995, Essay 1 266 15 WILLS & ESTATES • Generally, any bequests or fiduciary appointments (i.e. power of appointment, fiduciary nomination) in favor of the former spouse’s relatives remain intact. However, under the Uniform Probate Code (UPC) approach, such provisions are deemed to be revoked upon divorce. ■■ Prenuptial Agreement Does Not Apply to Voluntary Gifts or Bequests • LOW A prenuptial agreement between spouses waiving rights to each other’s assets upon divorce DOES NOT apply to voluntary gifts or bequests. July 2013, Essay 9 1 of 49 Exams I. Types of Gifts ■■ Specific, General, and Demonstrative Gifts • LOW • 1 of 49 Exams • • A specific gift is one that is specifically identified (i.e. real property or personal property). A general gift is nonspecific and can be satisfied from any of the funds remaining in a testator’s estate. If it’s unclear whether the gift is general or specific, the court must consider the intent of the testator. A demonstrative gift is a hybrid and occurs when the testator makes a general gift, but also identifies a specific source that the gift should come from. Money from a specified bank account is an example of a demonstrative gift. A gift of stock shares may be general or specific, depending on the language of the will and the intent of the testator. A gift of stock shares is a specific gift if the testator owns it at the time of execution or if it is stock in a closely held corporation. Feb 1999, Essay 3 J. Class Gifts ■■ Class Gifts • HIGH 9 of 49 Exams • A class gift is a gift to a group of persons described collectively (usually in terms of their familial relationship). Under the common law, the words of a testator/settlor were given their legal meaning. However, modern courts are more likely to consider the testator/settlor’s intent. The terms “children” and “issue” are interpreted in accordance with intestate succession rules. An adopted child inherits the same as a natural child when the adopted child is not the © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2017, Essay 4 Feb 2014, Essay 2 July 2012, Essay 1 Feb 2011, Essay 1 Feb 2010, Essay 8 July 2008, Essay 6 July 2004, Essay 1 July 2000, Essay 7 Feb 1998, Essay 3 267 15 WILLS & ESTATES • • • relative of the adopting parent. This applies to inheritance rights not only of the adopting parent, but the adopting parent’s family. Therefore, if a class gift is made to the issue or children of an adopting parent, the adoptive child will share in that gift as would a natural child of that parent. Class gifts generally close at the death of the testator/ settlor. Under the Rule of Convenience the class is closed when any member of the class is entitled to possession of the gift. When a gift to a class is involved, whether or not the gift to a predeceased member of the class will go into the residuary estate or be divided amongst the other class members depends on whether a group of persons is named (i.e. “my children”) or whether individual members of the class are specifically named (i.e. “Tom, Mary, and Joe”). When the class is specifically named, the gift will lapse and fall into the residuary estate unless an anti-lapse statute applies. When the class members are named as a group, the predeceased member’s share will be divided amongst the other members, unless there is a provision in the will to the contrary or an anti-lapse statute applies. A class gift may be based on a contingency. If so, remaindermen are entitled only to the gift if the specified conditions are satisfied. This is a cross-over rule with Wills & Estates. It is listed in both subjects, as it has been tested in both the Wills and Trusts contexts. K. Gifts to Children ■■ Inheritance Rights of Children & Disinheritance • MED 2 of 49 Exams • Generally, a child has NO rights to his or her parent’s estate if the parent chooses to leave him or her out of the will. The only time a child will have rights when omitted from a will, is if the child is a pretermitted child (which is a child born after the will was made). A child that is intentionally omitted from a will is NOT entitled to a share of the decedent’s estate. However, if a portion of the will fails, then a child will be entitled to his intestate share UNLESS the will intentionally disinherits the child. In most states, a general disinheritance clause (one disinheriting anyone not mentioned in the will) is NOT sufficient to show that a child was intentionally omitted. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 1997, Essay 7 Feb 1996, Essay 2 268 15 WILLS & ESTATES ■■ Legal Definition of Children • HIGH • 5 of 49 Exams • At common law, only biological, full blooded, children born into wedlock were entitled to inherit. Under the modern view, gifts to children include any child that is included in the legal definition of “children”, including biological children (marital and non-marital), half-bloods, and adopted children. An adopted child inherits the same as a natural child when the adopted child is not the relative of the adopting parent. This applies to inheritance rights not only of the adopting parent, but the adopting parent’s family. o However, adoption normally severs the parent-child relationship between the child and his biological parents. Thus, adopted-out children are generally NOT included in the estate of their biological parents (unless the biological parent’s will expressly states otherwise). Non-marital children inheriting from a father must first establish paternity. If a child is in the process of being adopted by a married couple when one of the spouses die, the child is treated as adopted if the child is subsequently adopted by the surviving spouse. July 2013, Essay 9 July 2012, Essay 9 July 2010, Essay 3 July 2004, Essay 4 July 1999, Essay 6 ■■ Inheritance by Equitable Adoption • MED 2 of 49 Exams In some states, a child may be informally adopted through a person’s words or conduct. When a person takes in a child and assumes parental responsibilities (some states also require the decedent to have promised or agreed to adopt the child), equity holds the person as having formally adopted the child. In such a situation, the child is entitled to an intestate share of the decedent’s estate. July 1999, Essay 6 Feb 1998, Essay 3 L. Family Protection ■■ Spouse’s Elective Share • MED 2 of 49 Exams Many states have enacted statutes that give a surviving spouse the right to take a statutory share of the deceased spouse’s estate (instead of taking under that deceased spouse’s will). The amount of the elective share varies by state, and is typically one-third of the net probate estate (which is the gross-probate estate less creditor claims). The elective share is in addition to any statutory family exemptions (family residence, exempt personal property, and a family allowance). © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 MEE TIP Usually, the bar examiners will provide you with a statute to apply for any question that involves a spousal right of election. For example, on the Feb. 2017 MEE (Essay 2), the question stated “A statute in this jurisdiction provides that a decedent’s surviving spouse is entitled to a ‘one-third elective share of the decedent’s probate estate.’” 269 15 WILLS & ESTATES • • • The elective share is calculated by first reducing the gross estate by the exempt personal property set-asides. Next, expenses (but not taxes) are paid to arrive at the net probate estate. In some states, testamentary substitutes (i.e. lifetime transfers or certain non-probate assets) are brought back into the estate to calculate the net estate. Once the net estate is calculated, the surviving spouse is entitled to the statutory percentage (usually one-third), reduced by the value of the assets that would pass absolutely to the spouse under the decedent’s will. The surviving spouse is NOT entitled to the elective share if that amount is less than the amount the spouse would take under the will. Generally, when the spouse elects to take the elective share, that share comes out of the estate first (usually pro rata from the other named beneficiaries). Most states allow a surviving spouse to claim their elective share against assets in a revocable trust. Under the Illusory Transfer Doctrine, if a settlor retains control over the trust property so that he remains the practical owner of it during his lifetime, the trust will be held ineffective as against a claim by the surviving spouse. The critical inquiry is whether the settlor intended to surrender complete dominion over the property to the trustee and trust beneficiaries. Under the Fraudulent Transfer Doctrine, the surviving spouse can reach assets in a trust if the transfer was fraudulent. In determining fraudulent intent, courts generally consider the facts and circumstances surrounding the transfer. Feb 2017, Essay 2 July 1996, Essay 3 ■■ Pretermitted Children • MED 3 of 49 Exams • • • A pretermitted child is one who was unintentionally left out of a will. If the child was born or adopted after the execution of a will, the child is entitled to an intestate share of the decedent’s estate UNLESS the child was intentionally omitted from the will. In some states the child is NOT entitled to a share of the estate if the decedent provided for the child outside of the will or left all (or substantially all) of estate to the child’s other parent. If the child was living at the time of execution, the child is NOT entitled to a share of the decedent’s estate UNLESS the child was omitted from the will because the testator did not know of the child’s existence or believed the child to be dead. Some states presume a child was unintentionally omitted if there is no evidence otherwise. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2015, Essay 6 July 2003, Essay 2 Feb 1996, Essay 2 270 15 WILLS & ESTATES M. Will Contests ■■ Testamentary Capacity • MED 3 of 49 Exams To have the capacity to execute a will, a testator must be capable of knowing and understanding: (1) the nature and extent of his property; (2) the natural objects of his bounty (i.e. relatives and friends); AND (3) the disposition that he is making of that property. Appointment of a conservator or guardian, alone, does not automatically establish a lack of capacity. Feb 2004, Essay 1 July 2002, Essay 2 Feb 1995, Essay 5 ■■ Undue Influence • HIGH 4 of 49 Exams • • A will is invalid to the extent it was executed under undue influence, and may be invalidated in full or in part. Undue influence occurs when a person exerts influence that overcomes a testator’s free will and judgment. A prima facie case of undue influence is established if: (1) the testator had a weakness (physical, mental, or financial) that made him susceptible to influence; (2) the wrongdoer had access to the testator and an opportunity to exert influence; (3) the wrongdoer actively participated in drafting the will; AND (4) there is an unnatural (unexpected) result. A common law presumption of undue influence is established if: (1) a confidential relationship existed between the testator and the wrongdoer; (2) the wrongdoer actively participated in the drafting of the will; AND (3) an unnatural result occurred. July 2009, Essay 9 Feb 2008, Essay 1 July 1998, Essay 1 Feb 1995, Essay 5 ■■ Fraud • LOW 1 of 49 Exams • A will may be contested on the grounds of fraud when: (1) an individual knowingly makes a material misrepresentation of fact; (2) with the intent to induce reliance by the testator; AND (3) the misrepresentation actually induces reliance to the testator’s detriment. Fraud may occur in the inducement or execution of a will. Under both, a will is invalid to the extent it was affected by fraud, and may be invalidated in full or in part. o Fraud in the inducement occurs when a person deceives a testator regarding facts related to the instrument (i.e. property or beneficiaries). o Fraud in the execution occurs when a person deceives a testator regarding the nature of the document being signed. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2009, Essay 9 271 15 WILLS & ESTATES ■■ Standing to Challenge a Will • MED 2 of 49 Exams A person has standing to challenge a will if the person: (a) is a beneficiary of the will; (b) should be a beneficiary of the will; OR (c) would be financially benefited if the decedent died without a will. Feb 2004, Essay 1 July 2002, Essay 2 ■■ No-Contest Clauses • LOW 1 of 49 Exams • • In most states, a provision (known as a no-contest clause) in a will purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate is valid. However, most courts will NOT enforce a no-contest clause if probable cause exists for instituting proceedings to challenge a will. In addition, no-contest clauses generally DO NOT apply when: (a) the contestant is alleging fraud or that the will was revoked by another will, and there is a good basis for the claim; (b) the contest is on behalf of a minor or incompetent; (c) the contestant is alleging that the court does not have jurisdiction; OR (d) the contestant is merely asking the court to interpret/construe the will’s terms. Feb 1995, Essay 5 ■■ Modification of a Will Due to Mistake • LOW 1 of 49 Exams Most courts will permit modification of a will to conform to the testator’s intent if there is clear and convincing evidence of a mistake. Under the UPC (adopted by some states), a court may modify a will if there is clear and convincing evidence even if it’s an unambiguous provision (however, most courts will not admit extrinsic evidence to do so). July 2010, Essay 3 N. Non-Probate Transfers ■■ Joint Bank Accounts & Convenience Account Exception • MED 2 of 49 Exams Joint tenants of a bank account have the right of survivorship, and will be entitled to the remaining funds upon the death of the other joint tenant. However, a contestant may overcome the presumption of the right of survivorship by showing that the account was set up merely for the convenience of the parties. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 2005, Essay 1 July 1997, Essay 7 272 15 WILLS & ESTATES • If the joint tenant was unjustly enriched by securing the funds in an account through misconduct such as fraud, undue influence, or breach of a fiduciary duty, a constructive trust will be created in which the court will force the tenant to hold the funds as trustee and return them to the decedent’s estate. ■■ Totten Trusts • LOW 1 of 49 Exams A Totten Trust is created when the depositor opens up a bank account for himself as trustee for another. If a beneficiary to a Totten Trust survives the depositor, the trust shall terminate and title to the funds vest in the beneficiary free and clear of the trust. Totten trusts are revocable both by will and during the lifetime of the creator. In order to effectively revoke a totten trust during the creator’s lifetime, the creator must either: (a) withdraw all funds; OR (b) deliver a signed, written, and acknowledged revocation to the bank which names the financial institution and the new beneficiary. A Totten Trust can be revoked, terminated, or modified by a provision in the depositor’s will only by (1) an express direction concerning such trust account, (2) which must specifically name the beneficiary and the financial institution. July 1997, Essay 7 ■■ Life Insurance Beneficiary • MED 2 of 49 Exams A life insurance policyholder has the power to change beneficiaries during his lifetime. However, such a change is generally not permitted through a will, and must be changed on the policy directly. The change of an irrevocable beneficiary requires the beneficiary’s consent, while the change of a revocable beneficiary does not. Feb 2011, Essay 9 July 2005, Essay 1 ■■ Inter Vivos Gifts • LOW 1 of 49 Exams • An inter vivos gift is one made during the donor’s lifetime. Transfers of property made during the donor’s lifetime are NOT subject to intestacy rules or probate. A valid inter vivos gift occurs when (1) a donor with intent to make a gift, (2) delivers the gift, and (3) the donee accepts the gift. Delivery of a gift may be constructive when the donor transfers a means of controlling or taking ownership of the property rather than the property itself (as through a letter or a token that represents the gift). Delivery of real property requires delivery of the deed. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 July 1997, Essay 7 273 15 WILLS & ESTATES ■■ Invasion of Non-Probate Assets to Pay Creditors • LOW 1 of 49 Exams If a decedent’s estate is inadequate to pay creditors, those who receive non-probate transfers may be liable to pay the decedent’s creditors up to the value of the transfer. Two or more transferees are severally liable. Generally, a creditor is NOT allowed to attach gifts given by a decedent prior to their death (an inter vivos gift). July 1997, Essay 7 O. Powers & Duties of Personal Representatives ■■ Powers & Duties of Personal Representatives • LOW 1 of 49 Exams • Personal representatives (i.e. an executor) must handle all the matters associated with probate, including filing necessary paperwork, gathering the decedent’s property, and notifying creditors, heirs, or devisees. If a decedent DOES NOT name a personal representative in his will, typically the court will appoint one in the following order of priority: (1) the surviving spouse of the decedent who is a devisee of the decedent; (2) other devisees of the decedent; (3) the surviving spouse of the decedent; (4) other heirs of the decedent; (5) any creditor (if 45 days have passed since the death of the decedent). July 2013, Essay 9 P. Living Wills & Durable Health Care Powers ■■ Durable Health-Care Power of Attorney & Advanced Directives • MED 2 of 49 Exams • All states have adopted statutes authorizing durable healthcare powers and advanced directives. o An advance directive (also known as a living will) specifies the patient’s preferences for treatment or non-treatment should he become incapacitated. o A durable health-care power of attorney gives a designated agent the power to make healthcare decisions for the principal in the event of the principal’s incapacity. Unless otherwise provided, an agent’s power is NOT limited to a particular event, illness, or time-period. The majority of states require that durable health-care powers and advanced directives be in (1) a signed writing, (2) that is witnessed or notarized. State laws vary on whether the person designated as the agent can be a witness to the durable health care power of attorney. Under the Uniform Health Care Decisions Act, the designated agent is NOT prohibited from being a witness. However, in many states, the person designated as the agent cannot be a witness to the power. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2016, Essay 5 July 2002, Essay 2 274 15 WILLS & ESTATES ■■ Durable Health Care Power of Attorney & Living Wills: Insulation of Agent’s Liability • MED 2 of 49 Exams • A typical health care power of attorney insulates an individual acting as agent or surrogate from civil or criminal liability (or to discipline for unprofessional conduct) for healthcare decisions made in good faith. In addition, agents who are mistaken, but in good faith believe they have authority to make a health-care decision for a patient, are likewise protected from liability. Health care decisions include: (1) selection and discharge of health care providers and institutions; (2) approval or disapproval of diagnostic tests, surgical procedures, programs of medication, and orders not to resuscitate; and (3) directions to withhold or withdraw artificial nutrition and hydration and all other forms of health care. Feb 2016, Essay 5 July 2002, Essay 2 ■■ Family Consent Laws • MED 2 of 49 Exams • An adult may designate any individual to act as surrogate by personally informing the supervising health care provider. In the absence of a designation (or if the designee is not readily available), any member of the following classes of the patient’s family, in order of priority, who is readily available may act as surrogate: (1) spouse (unless legally separated); (2) adult child; (3) parent; (4) an adult brother or sister; OR (5) if none of the previous individuals are available, an adult who (i) has exhibited special care and concern for the patient, (ii) is familiar with the patient’s personal values, and (iii) is readily available. If there are multiple members in the same class that have priority, a majority of those members have to agree on the health-care decision. © 2019 SmartBarPrep.com Purchased by Bethany Taylor, b.taylor133@yahoo.com #13486265 Feb 2016, Essay 5 July 2002, Essay 2 275

MEE Priority Outline (SmartBarPrep - July 2019)

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