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13 Cards in this Set

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Reformation
Equitable Remedy in K

- Changes written agreement to conform with the parties original understanding

Three Part Test

1. Valid contract

2. Grounds for Reformation
i. Mutual Mistake
ii. Unilateral Mistake where non-mistaken party knew of mistake
iii. Misrepresentation (both innocent and intentional)

3. Valid Defenses
i.. Unclean hands
ii. Laches

4. Non-defenses
i. Negligence of plaintiff
ii. Statute of Frauds
iii. Parol Evidence Rule
Rescission
Equitable Remedy in K

Original contract is considered voidable and rescinded

Grounds for Rescission

1. Mistake, misrepresentation, coercion, undue influence, lack of capacity, failure of consideration, illegality (never validly formed in the first place )

2.Mutual Mistake
i. Material Fact – rescission granted
ii. Collateral Fact – rescission denied
- Quality, desirability, fitness of property for particular purpose

3. Unilateral Mistake
- Rescission usually denied unless non-mistaken party knew or should have known of the mistake

4. Misrepresentation
- In order to get rescission, the plaintiff must show that they have actually relied upon the misrepresentation
Problems w/ Recission
1. Election of Remedies

i. Plaintiff sues for damages first rescission is not allowed
ii.. Suing for damages first affirms the contract
- Plaintiff sues for rescission first damages are allowed
iii. Plaintiff can sue for both at the same time, but must elect the preferred remedy before judgment

2. Availability of Restitution
- If a plaintiff who is entitled to rescission has previously rendered performance on the contract, he can get compensated for it or get the property back via restitution

3. Legal Rescission
i. Plaintiff gives notice and tenders back any consideration received
ii. Plaintiff then sues for restitution for anything given to defendant
Equitable Conversion (Specific Performance)
1. Is land sale contract specifically enforceable?

i. Yes – equitable conversion occurred upon execution
- Property interests of the buyer and seller were switched
- Buyer has real property interest (specifically enforceable right to land)
- Seller has personal property interest (specifically enforceable right to money )

2. Death prior to closing

3. Damage and Destruction
i. Risk of Loss
- Majority rule – risk on buyer
- Modern trend – risk on seller
Certainty (compensatory damages in tort)
1. Damages cannot be too speculative
i. Past losses have to be established with more certainty than future losses
ii. Historical records help to provide certainty (i.e. old v. new business)
iii. For future damages, plaintiff must show that they are more likely to happen than not. (ALL OR NOTHING)

2. Personal Injury Torts
i. Economic Losses (Special Damages)
- Basic certainty rules apply
- Medical expenses, lost earnings, etc.
ii. Non-economic Losses (General Damages)
- Basic certainty rules do not apply. Jury may award any amount it wishes
- Pain and suffering, etc.
Replevin
1. Plaintiff recovers possession of specific personal property (restitutionary, legal)
- Defendant does not have title

2. Two Part Test
i. Plaintiff has right to possession
ii. Wrongful withholding by defendant

3. Timing ( Plaintiff can recover the chattel before the trial)
i. Plaintiff must post a bond
- Damages to defendant is replevin was in error
ii. Defendant can defeat an immediate recovery by posting a redelivery bond
- Defendant can then keep the chattel until after the trial
iii. Sheriff repossesses the property for plaintiff

4. Replevin is almost always coupled with damages for loss of use or benefit to defendant during the time of detention
Rules for Constructive Trusts and Equitable Liens
TITLE!!!!!!!!!!!!

1. Inadequate legal remedy
i. Alternative – damages
ii. Reasons (D insolvent; Property unique- ct)

2. Tracing is allowed

3. BFPs prevail over plaintiff (proceeds of that sale can be traced)

4. Plaintiff prevails over unsecured creditors

5. Choice of remedy
i. Constructive Trust: If property value subsequent to taking goes up
ii. Equitable Lien
- If property value subsequent to taking goes down
- Defendant’s property cannot be traced solely to plaintiff’s property
Feasibility of Enforcement (Permanent Injunctive Relief)
Two Types of Injunctions

1. Negative – stop doing something
2. Mandatory (Affirmative) – do something

Rules :

1. Negative injunctions have no enforcement problems

2. Mandatory injunctions may have enforcement problems based on
i. Difficulty of supervision
ii. Concern with effectively ensuring compliance

3. Examples
i. Act involves application of great taste, skill or judgment (inj. denied)
ii. Series of acts over a period of time (inj. denied unless P’s case is otherwise great)
iii. Out-of-state act required
- Resident defendant – injunction granted
- Non-resident defendant – injunction denied
Inadequate Legal Remedy Alternative (Permanent Injunctive Relief)
1. Alternative – Replevin
i. Sheriff may not be able to recover it
ii. Defendant can file a redelivery bond

2. Alternative – Ejectment: Sheriff may refuse to act

3. Alternative – Money Damages
i. Too speculative
ii. No right to money damages because tort is only threatened, not yet committed
iii. Defendant is insolvent
iv. Irreparable injury (Unique property)
v. Avoiding a multiplicity of suits (prior lit. btwn parties relating to this type of action)
Problems w/ Injunctive Relief
1. Crimes: Equity will not enjoin crimes

2. Who is bound
i. Parties
ii. Employees and agents acting with notice
iii. Third persons acting with notice

3. Erroneous injunction: Must still obey erroneous injunction until it is modified or dissolved

4. Contempt: Disobeyance of court order
i. Civil contempt (to coerce)
- Money fine
- Imprisonment – defendant can get out by agreeing to comply
ii. Criminal contempt (to punish)
- Money fine
- Imprisonment – remain for set amount of time
- Constitutional safeguards apply
Available Contract Remedies (short)
1. Legal: Damages
i. Compensatory (including consequential)
ii. Nominal
iii. Liquidated

2. Restitutionary

i. Legal
- Restitutionary Damages
- Replevin
- Ejectment

ii. Equitable
- Constructive Trust
- Equitable Lien

3. Equitable
i. Specific Performance
ii. Rescission
iii. Reformation
Time of the Essence Clause
Specific Performance: K conditions of P must be satisfied

1. Buyer does not meet contract condition of timely performance

2. Facts
i. Land sale contract
ii. Contract will contain express time of the essence clause
iii. Clause will contain a forfeiture provision (forfeiture of all performance rendered to date if not timely)
iv. Partial performance which is potentially subject to forfeiture
v. Buyer will make a late payment

3. Seller wants to keep both land and any performance rendered to date, buyer will bring lawsuit for specific performance

4. Equitable maxim – equity abhors forfeitures

5. Factors
i. Loss to seller is small
ii. Tardiness is de minimis
iii. Waiver (seller has accepted late payments before)
iv. Buyer would suffer undue hardship
Contract Conditions of Plaintiff Must be Satisfied (Specific Performance)
1. Plaintiff must be able to show his contract conditions have been fulfilled

i. Already performed
ii. Ready and able
iii. Excused from performing

2. Deficiencies
i. Seller cannot deliver the agreed upon consideration
ii. Seller as Plaintiff can enforce contract if defect is
- Minor
- Major only if seller can cure before or at closing
iii. Buyer as Plaintiff can enforce contract even if defect is major, unless very major
- Abatement in purchase price to take into account defect in consideration

3.Time of the Essence Clause