Elements of Battery
- 1. Harmful or offensive contact with the P's person
- 2. Intent to cause the above
- 3. Causation (substantial factor)
Elements of Assault
- 1. Creating a reasonable apprehension in P of immediate battery
- 2. Intent
- 3. Causation
Elements of False Imprisonment
- 1. An act or omission that confines or restrains P to a bounded area
- 2. Intent
- 3. Causation
Requirements for 'Shoplifting Detention' Defense to False Imprisonment
- 1. Reasonable belief as to fact of theft
- 2. Detention in a reasonable manner
- 3. For a reasonable period of time to make an investigation
Elements of Intentional Infliction of Emotional Distress (IIED)
- 1. Extreme and outrageous conduct
- 2. Intent (actual or reckless)
- 3. Causation
- 4. Damages (severe emotional distress)
Requirements for IIED to a bystander
- 1. P was present when injury occurred to other person
- 2. P was a close relative of person
- 3. D knew that P was present and a close relative
- *presence and relationship not required if D had a design or purpose to cause distress
Elements of Trespass to Land
- 1. Physical invasion of P's real property by D
- 2. Intent to enter land
- 3. Causation
- Elements of Trespass to Chattels
- 1. Interference with P's right of possession
- 2. Intent to perform the act
- 3. Causation
- 4. Damage
Elements of Conversion
- 1. Interference with P's possession serious enough to warrant that D pay full value
- 2. Intent
- 3. Causation
Defenses to Intentional Torts
- 1. Consent (actual or implied)
- "2. Self Defense (reasonable belief, no retaliation, no retreat required except for deadly force outside home, not allowed for aggressor, reasonable force)"
- 3. Defense of others
- "4. Defense of property (reasonable, but never deadly, force)"
- 5. Reentry onto land
- 6. Recapture of Chattels (force may only be used in hot pursuit)
- 7. Privilege of arrest
- 8. Necessity (private or public)
- 9. Discipline (parent or teacher)
Elements of Defamation
- 1. Defamatory language by D
- 2. Of or concerning P
- 3. Publication (single third party)
- 4. Damage to reputation of P*
- (5). Falsity
- (6). Fault by D
- *damage not required for libel or slander per se
Slander Per Se Categories
- 1. Business or profession
- 2. Loathsome disease
- 3. Crime of moral turpitude
- 4. Unchastity of a woman
- Fault Requirements for Defamation re Matter of Public Concern
- Public figure = malice (intent or recklessness)
- Private figure = negligence sufficient
Defenses to Defamation
- 1. Consent
- 2. Truth (except for public concern)
- 3. Absolute privilege
- a. Gov't proceedings
- b. Between spouses
- "4. Qualified Privileges (public policy promotes candor, can be lost if abused, e.g., giving a reference)"
Elements of Appropriation
1. Unauthorized use of P's picture or name for commercial advantage
Elements of Intrusion
- 1. Prying or intruding on affairs or seclusion of P
- 2. Objection to a reasonable person
- 3. The subject matter is private
Elements of False Light
- 1. Wide publication of facts placing P in false light
- 2. Objectionable to a reasonable person
- (3). Malice if matter concerns the public interest
Elements of Public Disclosure of Private Facts
- 1. Wide publication of private information about P
- 2. Objectionable to a reasonable person
Defenses to Invasion of Privacy Torts
- 1. Consent
- 2. Absolute Privileges
- 3. Qualified Privileges
Elements of Misrepresentation (both intentional and negligent)
- 1. Misstatement of fact (or opinion if from expert)
- "2. Scienter (i.e., malice) for intentional; negligence is an alternative"
- 3. Intent to induce reliance
- 4. Causation (actual reliance)
- 5. Justifiable reliance
- 6. Damages (pecuniary)
- (7). Negligent Misrepresentation requires commercial D
Elements of Interference with Business Relations
- 1. Valid existing contract or expectancy
- 2. D knows of contract or expectancy
- 3. Intentional interference
- 4. Damage
Elements of Negligence
- 1. Existence of duty
- 2. Breach
- 3. Actual and proximate causation
- 4. Damage
Special Duties for (1) Child (2) Professional (3) Common Carriers and Innkeepers
- "(1) Child of like age, intelligence, experience (unless adult activity)"
- (2) A reasonable professional in similar community
- (3) Liable even for slight negligence
Duty owed undiscovered trespasser
Duty owed discovered or expected trespasser
- Activities - ordinary RPP
- Artificial conditions involving a serious risk of injury that the o/o knows of
- Duty owed licensee
- Activities - ordinary RPP
- Any dangerous condition o/o knows of
- Duty owed invitee
- Activities - ordinary RPP
- Any dangerous condition o/o should know about - so must make reasonable inspection
Elements of Negligent Infliction of Emotional Distress
- 1. P was within danger zone of physical impact
- 2. P must suffer physical symptoms of distress (contrast with IIED)
Res Ipsa Loquiter Requirements
- 1. Usually wouldn't happen without negligence
- 2. Negligence attributed to D (often instrumentality within D's exclusive control)
- 3. P not contributorily negligent
- *This merely creates inference of negligence for the jury to decide on*
Product liability (both negligence and strict liability theories)
- Must have a commercial supplier
- 1. The defect must have existed when it left D's control (inference if in normal channels)
- 2. Successful tort theory
- "a. Negligence (in design, manufacture, warnings, inspection)"
- b. Strict Liability (need to show unreasonably dangerous condition)
- "*Under both theories, P must be in foreseeable zone of risk*"
- Conduct objectionable to an average person
- Private nuisance - P has possession of land affected
- Public nuisance - P has been uniquely harmed
- Resolution involves balancing of competing interests
Requirements for a Holder In Due Course (HIDC)
- 1. Must be a holder (proper negotiation: bearer -> pass possession; order -> pass and indorse)
- 2. Acquired for value (past or present)
- "3. Taken in good faith (honesty in fact, fair dealing)"
- 4. No notice of:
- "a. Overdue, dishonored, principal default"
- b. Forged signature or alteration
- "c. Another's claim to it (e.g., stolen)"
- d. Drawer/Maker has a defense to payment
Real Defenses against HDIC
- 1. Infancy of maker/drawer
- "2. Duress, lack of capacity, illegality of debt (only if renders void, voidable not enough)"
- 3. Fraud in the factum
- 4. Discharge in bankruptcy
- Last of:
- 1. Value given (binding future promise OK)
- 2. Debtor has rights in collateral
- 3. Authenticated (assent in perceivable form) written (oral OK if collateral in creditor's possession) security agreement providing adequate description of collateral (more detail in consumer transactions)
Basic requirements for Will
- T 18 or older
- 1. Signed by T (proxy in presence OK)
- 2. Two attesting witnesses
- "3. Witnesses sign in T's presence (no need same time or place, IL rule line of sight, majority rule conscious presence)"
- "* Holographic unwitnessed NOT OK in IL, but yes in majority *"
Rule for beneficiary as attesting witness
- "Doesn't affect validity of will, but beneficiary-witness loses legacy unless:"
- 1. Supernumerary rule (enough witnesses otherwise) OR
- "2. Would have taken legacy as heir anyway, then receives lessor of bequest in will or intestate share"
- "* Executor-witness may not be compensated for service in IL, but yes in overwhelming majority *"
Proof of Lost Wills
- 1. Proof of due execution (testimony of attesting witnesses)
- 2. Cause of will's nonproduction (overcome presumption of revocation which follows will last seen in T possession not found or mutilated)
- 3. Contents substantially proved by copy or testimony of witnesses who read or heard
Revocation and Alteration of Wills
- Revocation by:
- "1. Later testamentary instrument says so (if not, then new instrument treated as codicil)"
- 2. Physical act in IL (writing on top of text counts). Majority rule (holographic-OK states) handwritten + signed can revoke
- IL rule: No effect unless meets requirements of new will or codicil
- "Majority rule: Physical acts can rule out, but additions/changes not valid (watch out for DRR)"
DRR and Anti-Lapse Rules
- "Dependant Relative Revocation: Mistake of law as to the validity of another disposition renders revocation contrary to T's intent. If revoked instrument closer to intent then is disregarded (i.e., it's better to undo the revocation than suffer some worse consequence when the other disposition fails)"
- "Anti-lapse: Beneficiary predeceases T, gift lapses and is revived only if benefits child or other descendant of T (IL) OR descendant of T's grandparent (UPC)"
- T marries post-execution?
- T divorces post-execution?
- New child post-execution?
- "Marries after -> No effect on will, but spouse can get elective share (1/2 if no other descendants, 1/3 if descendants)"
- Divorce after (separation not enough!) -> revokes all gifts and fiduciary appointments (as though former spouse predeceased)
- New child aka pretermitted child -> takes intestate share unless will specifies otherwise (watch out for codicils post-birth)
Abatement of legacies to pay claims against estate
- Claims paid in order out of:
- 1. Intestate portion
- 2. Residuary
- 3. General Legacies
- 4. Specific bequests
- (demonstrative can be split by how fulfilled)
- "Incorporation by reference (i.e., external document referred to in will)"
- UPC: Allows later document to dispose of tangible property (but not money or intangibles)
Acts of significant independence
"May specify contents of room, trunk, etc. in a bequest even if contents change later (except title documents)"
Methods for addressing ambiguity in Will
- "Mistake in drafting -> If plain meaning clear, no overturning"
- Mis-description = Latent ambiguity
- Clear contradiction = Patent ambiguity
- May use extrinsic evidence:
- "1. Facts and circumstances (family relationships, T's personality, etc.)"
- 2. T's statements to attorney but NOT T's statements of intent to other
- "If extrinsic evidence fails to cure ambiguity, gift fails entirely"
Conditions for Contractual Will
- IL: 1. Married couple's will
- 2. Labeled joint and mutual
- 3. Entire estate to spouse
- 4. Disposes property in unified disposition
- 5. Common dispositive scheme on death of survivor
- UPC: must state contract exists
- "Later contradictory wills still valid, but constructive trust against beneficiaries to carry out earlier contractual will"
- Spouse: 1/2 if descendants
- Strict per stirpes to descendants
Single decedant distribution
Majority: All to parents
Lack of Testamentary Capacity
- "1. Understand nature of act (i.e., executing will)"
- 2. Know nature and approx. value of property
- 3. Know natural objects of bounty (aware of family)
- 4. Understand disposition made
- 1. Existence and exertion of influence
- 2. Effect was to overpower mind and will of T
- 3. Product is a will that would not have been made BUT FOR influence
Basic Elements of Crime
- "Voluntary, physical, conscious, willing act"
- Malice Crimes
- Murder (common law)
- General Intent Crimes
- Rules for holding responsible for crimes of others
- "Modern Rule: Provided assistance, did so intentionally"
Common Law: 4 Categories
- 1. Principal in 1st Degree (commits element)
- 2. Principal in 2nd Degree
- 3. Accessory Before the Fact
- 4. Accessory After the Fact (only one that is an independent crime)
- Each is held responsible for foreseeable crimes of others
- Asking or encouraging another person to commit a crime
- No withdrawal
- Merges into completed crime
- Impossibility no defense
- Two-plus people with capacity to commit a crime and the intent to enter agreement (Bilateral)
- No withdrawal once overt act taken (but shields from later crimes)
- Impossibility no defense
- A substantial step towards completion of a crime
- No withdrawal once substantial step
- Merges into completed crime
- Impossibility no defense
- "Can abandon under MPC, requires total abandon (not mere postponement) and also voluntary (not due to encountering difficulty)"
Insanity Defense Variants
- 1. M'Naughten: Doesn't know right from wrong
- 2. Irresistible Impulse: Can't conform conduct to law
- 3. Product rule: Action was product of mental illness
- 4. MPC: Combines 1 and 2
- Involuntary: Defense to all crimes
- Voluntary: Only allowed against specific intent crimes
Mistake of Fact
- "Valid defense for specific intent crimes, even if unreasonable"
- "For other crimes, mistake must be reasonable"
Mistake of Law
"Generally not a defense, unless the statute requires knowledge of illegality (in which case, the mistake of law is not really a defense, but rather a failure of proof of the elements)"
- Force reasonably necessary against aggression. Both objective and subjective standard.
- Good faith required (can't create conditions)
- Aggressor must disengage or be met with increased force before gaining possibility of using defense
Requirements for deadly force used on fleeing felon
- 1. Probable cause that person committed crime
- 2. Reasonably necessary to use deadly force to stop escape
- 3. Felon posed risk to others (constitutional requirement)
- Police instigated the crime
- Defeated if gov't can show D predisposed to commit the crime
- Battery (Criminal)
- D inflicts unwarranted touching on another
- General Intent
- 1. Attempted Battery
- "2. Tort-like, Victim has apprehension of immediate touching"
- Both specific intent
Malice for Murder
- 1. Intent to kill
- 2. Intent to inflict great bodily harm
- "3. Implied malice (depraved heart, grossly reckless)"
- 4. Felony murder (note modern rule requires D to directly cause death)
Adequate provocation to reduce murder to voluntary manslaughter
- 1. D acts under provacation that causes loss of control
- 2. Provocation would cause ordinary reasonable person to lose control
- 3. Insufficient time to cool
- 4. D does not in fact cool
- Movement of victim against will
- General intent crime
- Intercourse by force or threat of force with no consent
- General intent crime
- "Crime against possession, title never passes"
- 1. Taking and carrying away
- 2. Trespass = against will of owner*
- 3. Intent to PERMANENTLY deprive
- "4. Only applies to personal property* If with consent of owner, but achieved by misrepresentation, then Larceny by Trick"
- 1. Fraudulent
- 2. Conversion
- 3. Of the property of another
- 4. By a person in lawful possession (distinguish from mere custody)
- 1. D obtains title
- 2. To property of another
- 3. By intentional (or knowing) false statement of past or existing fact
- 4. With intent to defraud another
Receiving stolen property
- 1. Actually received
- 2. Personal property
- 3. with Knowledge it was stolen
- 4. with Intent to permanently deprive
- Crime against the person
- 1. Taking personal property
- 2. Intent to permanently deprive
- 3. From another's presence
- 4. By force or threat of force
- 1. Breaking and entering (minimal physical act)
- 2. Of another's dwelling*
- 3. At night*
- 4. With intent to commit felony inside
- *modern rule ignores these
- The malicious burning (damages fiber) of the dwelling of another
- Malice crime
"A practical, non-technical probability that evidence will be found"
Challenges to Affidavits (basis for Warrants)
- 1. Does not demonstrate probable cause
- 2. Based on falsities:
- a. an intentional lie
- b. relating to material fact
- c. by a gov't official
Good Faith Limitation on Exclusionary Rule
- Evidence not excluded if:
- 1. Proceeding in good faith
- 2. Reasonable belief warrant was valid
- 3. Officers in fact have a warrant which is later found invalid (officers merely told warrant exists is OK)
Exceptions to Warrant Rule
- 1. Search incident to arrest (person plus area under control at time)
- "2. Automobile search (with probable cause it contains evidence, containers in vehicle ok inventory later ok, checkpoints only ok if routine, car-related, limited intrusion"
- 3. Plain view
- "4. Consent (voluntary, apparent authority ok)"
- 5. Stop and frisk (see Terry)
- "6. Probable cause (flight alone significant, but not enough)"
- "7. Exigent circumstances (hot pursuit, scene of homicide, sweep of premises)"
- 8. School children (reasonable suspicion standard)
- 9. Garbage (presumed no expectation of privacy)
- 1. Reasonable suspicion that crime is about to take place
- 2. Officer may stop and question
- "3. If answers don't dispel suspicion, may pat down outer garments"
Miranda and Right to Counsel Offense-specific?
- "5th Amendment Miranda is not offense-specific, so all questioning must stop if D requests lawyer, even about unrelated crime"
- "6th Amendment right to counsel is offense specific, e.g., line-up for unrelated, uncharged offense, no right to attorney present"
Duties of Life Tenant
- "1. No voluntary waste (any action beyond maintenance causing harm - can continue normal depletion if mine,quarry,etc.)"
- "2. Maintain (i.e., no permissive waste) (includes repair, taxes, only interest on mortgage)"
- 3. No Ameliorative waste unless changed conditions make property relatively worthless
Reversion (future interest retained by grantor)
- When Grantor gives less than durational estate
- O to A for life (O has reversion)
- "O to A for life, then to B if B survives A (O has reversion, B has contingent remainder)"
- "O to A for life, then to B (O has nothing, B has vested remainder)"
- NOT subject to RAP
Possibility of Reverter
- When grantor gives fee simple with condition that triggers automatic reverter.
- "O to A and heirs for so long as X never happens (O has possibility of reverter, A has fee simple determinable)"
- NOT subject to RAP
Right of Entry
- "Grantor gives fee simple on a condition subsequent, allows right of entry"
- "O to A and heirs provided that if X ever happens, O or heirs have right to reenter and retake (O has right of entry, A has fee simple on a condition subsequent)"
- NOT subject to RAP
- NOT triggered by mere words 'for the purpose of'
- "Cuts short an estate before it, but otherwise doesn't naturally come into possession of that estate"
- "O to A for life, then to B and heirs, but if X occurs, then to C (B has vested remainder subject to executory interest, C has executory interest)"
- Holder of executory interest cannot sue life tenant (contrast with holder of remainder)
- Subject to RAP
Interests potentially voided by RAP
- 1. Contingent remainders
- 2. Executory interests
- 3. Vested remainders subject to open
- 4. Options and rights of first refusal (unless connected to lease)
- Doesn't apply if gift is from charity to charity
- "Created by TTIP (time, title, interest, possession) and clear intention to create in writing"
- "Right of survivorship, right to partition"
- "Destroyed by partition, severance (one of TTIP broken, e.g., by conveyance, mortgage in a title state, contract of sale, creditor's sale)"
Termination of Easement
- 1. Unity of ownership (of both estates)
- 2. In valid release (in writing to satisfy SoF)
- 3. Abandonment: intent manifested plus physical act
- 4. Estoppel:
- a. Some conduct or assertion by dominant owner
- b. reasonable reliance by the servient owner
- "c. A change in position (e.g., servient owner building on the easement)"
- 5. Termination by prescription (servient blocks use for statutory period)
- 6. End of necessity
Common Plan (reciprocal negative servitudes)
- 1. Intent (inferred from a common scheme for development)
- "2. Notice of the covenants (actual, inquiry, record)"
Chattels becoming fixtures
- Look to:
- 1. relationship between annexor and premises
- 2. Degree of annexation
- 3. Nature and use of chattel
- (Called accession when personalty becomes an integral part of property and therefore is essentially a fixture)
Factors for Equitable Mortgage
- 1. debt or promise of payment by deed's grantor
- 2. grantee's promise to return land when debt paid
- 3. amount advanced to grantor/debtor lower than property value
- 4. degree of grantor/debtor's financial distress
- 5. parties' prior negotiations
Benefits of equitable servitudes runs to successors if:
- 1. original parties so intended
- 2. servitude touches and concerns the land
- "3. subsequent purchaser had actual or constructive notice of the covenant (actual, record, inquiry)"
Quasi-easement (easement implied by law)
- 1. Prior to time tract divided there was a use of servient reasonably necessary to dominant part use
- 2. The use must be apparent and continuous at time tract divided
- "(do not confuse this with a pure necessity easement, which can always arise if truly necessary)"
Adverse possession HELUVA
- 1. Hostile
- 2. Exclusive (excluding others)
- 3. Lasting (statutory period)
- 4. Uninterrupted
- 5. Visible (open and notorious)
- 6. Actual (plus constructive or leasing)
Marketable title Seller must give:
- 1. Proof of title (deeds in chain of title)
- 2. Title free of encumbrances
- "3. Valid legal title, but not until day of closing"
- Seller must be given time to cure if buyer notices defect in title
- "Otherwise, buyer can get"
- 1. Rescission
- 2. Damages
- 3. Specific performance (with price abated)
Actual cases and controversies
- "1. Standing (Injury, Causation and Redressability, Generally no third party standing, No generalized grievances except establishment clause case)"
- "2. Ripeness: whether court may grant pre-enforcement review (hardship, fitness of issues and record)"
- 3. Mootness: Must still be live controversy or capable of repetition
Issues Fed Courts won't adjudicate
- 1. Republican form of government
- 2. President's foreign policy
- 3. Impeachment and removal
- 4. Partisan gerrymandering
Congress's Police Power MILD
- Indian Reservations
- Lands (federal)
- District of Columbia
Treaties vs. Other sources of law
- Treaties > State Law
- Treaties = Federal Law (last in time controls)
- Constitution > Treaties
- Executive agreements vs. Other sources of law
- Exec > State Law
- Federal Law > Exec
- Constitution > Exec
Privileges and Immunities (Article IV vs. 14th Amendment)
- Art. IV: No state may deny citizens of other states the privileges of its own citizens without substantial justification
- 14th Amendment: Preserves a person's right to travel between states
Differing levels of scrutiny verbatim
- Rational Basis: Rationally related to a legitimate purpose
- Intermediate: Substantially related to an important purpose
- Strict: Necessary to achieve a compelling purpose (least restrictive alternative)
Due process (14th Amendment) What procedures are required?
- "Assuming a deprivation of life, liberty (freedom secured by constitution or statute) or property (entitlement to benefit),"
- then balancing test with:
- 1. Importance of interest to individual
- 2. Ability of additional procedures to increase accuracy
- 3. Government's interests (efficiency)
Rights triggering Strict Scrutiny
- "Marry, procreate, children, keep family together, raise children, contraceptives"
- Travel (durational requirements for benefits)
- "Speech (content-based and prior restraint), Association"
- Burden on religion if not a neutral law of general applicability
Abortion rights standard?
Rights triggering rational basis
- Practicing trade or profession
- Physician-assisted suicide
Equal Protection - classifications triggering strict scrutiny
- National origin
- Alienage generally
Equal Protection - classifications triggering intermediate scrutiny
- Undocumented alien children
Equal Protection - classifications triggering rational basis
- Alienage related to democratic process
- Congressional regulation of aliens
- All others
Content neutral law burdening speech?
Symbolic Speech standard?
"Important interest unrelated to the suppression of the message, impact on communications no greater than necessary to achieve goal"
Obscenity laws require...
- 1. Appeal to prurient interest
- 2. Patently offensive
- 3. Artistic literary political scientific by NATIONAL standard*
- other elements may be by any standard
- "Think P.O.S. (prurient, offensive, social qualities)"
"Speech restrictions in public forums (parks and sidewalks) and limited public forums (gov't could close off, but chooses not to)"
- 1. Content-neutral or else meet strict scrutiny
- 2. Time place and manner ok
- 3. Regulation need not use least restrictive
- "4. Permit fees ok, but no discretion on amount of fee"
"Speech restrictions on non-public forums (military, outside prisons, city buses, sidewalks outside post office, airports)"
- Can close off speech entirely if viewpoint neutral and rational basis met.
- At Airports can't prohibit distribution of literature
Establishment Clause checklist SEX
- Secular purpose
- Effect neither to advance nor inhibit religion
- no eXcessive entanglement
- Discrimination among religions
- Strict scrutiny
Attorney's mental impressions - never unless impossible; everything else - always unless consultants
Substitute Judges: Once before substantial issue resolved
P's Voluntary Dismissal: Once before trial or counterclaim + 1-yr to refile
- D's 2-615: Pre-answer for facial defect
- D's 2-619: Affirmative matter defeating claims
no geniune issue of material fact
SMJ in Federal Court
Limited jurisdiction 'arising under' or diversity (complete + over 75K) plus supplemental (common nucleus of operative fact)
Process in Federal Court A WASP
"Abode, Waiver, Agent Service, State Methods, Personal"
Venue in Federal Court
- "1. Any D resides, if all from same state"
- 2. Substantial part of claim arose
New venue proper + discretion
Pleadings in Federal Court
- Notice of plausible claims (fraud with particularity)
- Amendments freely for justice
Relation back of claims:
Relation back of parties:
Sameness + Knowledge within 120 days of filing
Joinder in Federal Court
- Compulsory Counterclaims: Same transaction or occurrence
- Impleader: 3rd party claims for all or part
- Interpleader: Common fund + Rival claimants (minimal diversity enough + 500)
- Intervention: (1) Interest adversely affected (2) Discretion and commonality
- "Indispensable: Absence so prejudicial, lawsuit dismissed"
- "Class Actions: CAN'T (PS) (Commonality, Adequacy, Numerosity, Typicality) (Predominance, Superiority)"
Discovery in Federal Court
Automatic prompt disclosure
Presumptive limits on depos and exams
Duty to supplement
Work Product �
Attorney's mental impression never; all else - showing
No genuine issue of material fact - burden on non-mover
Judgment as a Matter of Law:
Insufficient evidentiary basis + No reasonable jury
Renewed Judgment as a Matter of Law:
if original JML made
Discretionary (1) trial errors or (2) against weight
Trial by Jury:
Demand (14 days) + Money
Finality and Appellate Review in Federal Court
Parties are barred from relitigating claims or issues which they have already fully and fairly litigated
"Only final orders, except partial or controlling legal issues (interlocutory order)"
Rules for Abandoned Property
- It is abandoned if owner:
- 1. Voluntarily gives up possession
- 2. with the intent to give up title and control
A finder acquires rights in abandoned property if
- 1. Finder has possession
- 2. with the intent to assert title and control
Rules for Lost Property
- Is found property where the owner took no voluntary act in placing the property there; parting was accidental and involuntary
- Finders win (except trespasser)
- "Owner/Occupiers lose (unless in highly private locus, i.e., home or private office)"
- Master wins over servant
Rules for Mislaid Property
- Is found property where the owner took some affirmative act in placing the property there;
- Finders lose
- Owner/Occupiers win
Requirements for Gifts Inter-Vivos
- 1. Donative intent (to pass TITLE)
- "2. A valid delivery (handing to or already in possession of, representative object ok)"
- "3. A valid acceptance (silence OK, only explicit rejection defeats)"
- Tricks: Checks made out to donee not delivered until cashed
- Checks by third party or stock still valid when given to donee even if not indorsed
- Agent of donor doesn't deliver until given to donee
- Agent of donee satisfies delivery
Gifts Causa Mortis
Same as inter vivos plus peril required: Fair degree of certainty or likelihood of imminent death
- 1. Donor may revoke at any time
- 2. Donee predeceases donor
- "3. Donor recovers (i.e., Donor must die for valid gift)"
- No longer matters what kills the donor (used to require death by known peril)
- Formed when bailee takes CUSTODY of chattel with INTENT to serve as bailee
- "Presumed to be bailee of items typically found in chattel (e.g., valuables in glove compartment of car)"
- Valet parking with keys surrendered = bailment
- Self-park = not a bailment
- Liability of Bailee
- "Sole benefit of bailor (e.g., a gratis repair) = liable only for gross negilgence"
- "Sole benefit of bailee (e.g., borrowing chattel from friend) = liable for slight negligence"
- Mutual benefit = ordinary care
- *Modern trend is to always apply ordinary care*
- "Unauthorized use = strictly liableMisdelivered chattel (e.g., to someone who fraudulently claims) = strictly liable unless forged claim check"
Exculpatory Clauses for Bailee
May be used to limit liability for (only) ordinary negligence so long as effective notice
Character Evidence in Civil Cases
- Not admissible as circumstantial evidence to infer conduct
- "Is admissible when character is itself a material issue (specific acts, opinion, reputation)"
Character Evidence in Criminal Cases
- Not admissible at initiative of prosecution
- "Admissible by defense for a relevant trait (e.g., peacefulness if accused of violence) (reputation and opinion)"
- Then prosecution may cross examine good character witness on specific acts
- Prosecution may also call own witnesses for bad opinion or reputation
Character Evidence regarding Victim?
- "D may, as part of self-defense plea, show opinion of or reputation of victim"
- Prosecution then may show good rep/opinion of victim AND may also show bad rep/opinion of D
Victim Character in Sexual Misconduct Case?
Specific acts only to show:
- 1. Third-party source of semen
- 2. Prior acts of consensual intercourse between D and victim
- 3. If exclusion would violate constitutional rights of D
Rules for other crimes of the accused offered into evidence
- Allowed if:
- 1. Accused offered good character evidence first
- "2. Other purpose to prove a material fact other than disposition: MIMIC (Motive, Intent, Mistake absence of, Identity, Common plan"
- Note: Prior sexual assault and child molestation may always be shown by prosecution when similar accusation
Methods of Authentication
- 1. Admission
- 2. Eyewitness testimony
- "3. Handwriting proof (familiar lay witness, expert, jury comparison)"
- "4. Ancient document rule (20 yrs+, regular on face, natural place of custody)"
- 5. Solicited reply
- "6. Self authenticating (certified copies, official publications, periodicals, trade label, notarized)"
Best Evidence Rule
- Applies to:
- 1. Legally operative documents
- 2. Witness's sole knowledge from document
- NOT Facts known independent of writing
- NOT Collateral (minor importance)
- Public records (certified copies ok)
- "Voluminous (summary ok, originals made available)"
- Duplicates (unless authenticity issue or unfair redaction)
- Refreshing recollection
- When witness memory fails anything may be used
- "Doesn't have to meet normal evidentiary rules (authentication, hearsay, best evidence)"
- Introducing party may not admit to evidence
- "Opposing party may see it, use it on cross, and even introduce it"
- 1. witness had personal knowledge
- 2. writing by/under supervision/adopted by witness
- 3. timely made
- 4. accurate when made
- 5. witness unable to remember all or part
- Only may be read into evidence
- Is an exception to hearsay
Expert Testimony Requirements
- Judge decides if:
- 1. Subject matter expert-appropriate (reliable+relevant)
- 2. Qualified expert
- 3. Reasonably certain of opinion
- 4. Proper factual support
- a. Personal knowledge
- b. Facts supplied though evidence or hypo
- c. Fact not in evidence but which expert uses regularly
Learned Treatise Evidence
- May use to impeach opposing expert if:
- 1. opposing expert relied on it
- 2. opposing expert admits it is authoritative
- 3. call your own witness to say it is authoritative
- 4. judicial notice
- Federal rules allow treatise to support own expert
- "May be offered for its truth, but only read to jury, no admitting it"
- 1. Prior inconsistent statement^
- 2. Showing of bias
- 3. Prior conviction for crime
- 4. Specific act of dishonesty
- 5. Bad rep/op for veracity*
- ^ Comes in for truth if under oath at prior proceeding or depo
- * No extrinsic evidence
- "1. Verbal acts or legally operative facts (acceptance, defamation, bribery, permission, etc.)"
- "2. Showing effect on audience (notice, reason for action)"
- 3. Circumstantial evidence of state of mind (I am the pope)
- 4. Prior inconsistent statement under oath
- 5. Prior consistent statement to rebut recent fabrication
- 6. Prior statement of identification by witness
- 1. Admission of party or agent (Federal rules say not hearsay at all)
- 2. Former testimony (unavailability + opportunity to cross)
- 3. Statement against interest (unavailable + not exculpating D unless corroborating)
- "4. Dying declaration (homicide or civil concerning factual cause of death, need not die but must be unavailable)"
- 5. Spontaneous statements
- 6. Business records (germane)
Confrontation Clause Requirements
- 1. Offered against accused in criminal case
- 2. Declarant unavailable
- 3. Testimonial in nature
- 4. Accused had no opportunity to cross-exam declarant at time
- Prosecution demonstrates D's wrongdoing caused unavailability
Termination of Contract
- 1. Lapse of time (time stated or reasonable)
- 2. Death of party prior to acceptance
- 3. Revocation (statement or conduct of offeror)
- "4. Rejection (words or conduct of offeree: counter, conditional accept, addt'l terms if not goods )"
- "1. Communications other than acceptance effective when received (possession, not knowledge)"
- 2. Acceptance effective when mailed
- "3. If rejection mailed before acceptance, neither effective until received"
- 4. Mailbox rules may not be used to satisfy option deadline
Tricky Acceptance Scenarios
- "1. Conditional verbal response + later conduct (CL = counter is accepted, UCC = accept w/o counter terms)"
- 2. Offeree fully performs (check if notice needed)
- "3. Offeree starts to perform (bilateral = acceptance, unilateral = no acceptance)"
- "4. Wrong goods sent (generally acceptance + breach, accommodation notice = counteroffer)"
Preexisting contractual or statutory duty scenarios
- "Generally, not consideration, except:"
- 1. addition or change to performance
- 2. Unforeseen difficulty
- 3. 3rd party promise to pay
- 4. Agreement to pay part of disputed debt before otherwise due in satisfaction of whole
- UCC - only rule is good faith for changes. No consideration needed.
Promises within statute of frauds
- 1. Answer for debts of another if they default and not for benefit of guarantor
- 2. Executor promise to answer personally for debt of decedent
- 3. In consideration of marriage
- 4. Service not capable of performance one year or less
- 5. Transfer of interest in real estate (except leases one year or less)
- 6. Sale of goods $500 or more
- 7. Lease of goods $1000 or more
Satisfaction of Statute of Frauds
- "1. Performance (full for anything, part only with goods to extent of part)"
- 2. Substantial beginning on custom goods
- "3. Part performance of real estate transfer (any two of payment, improvement, possession)"
- "4. Writing (CL who and what, UCC quantity, must also be signed by person asserting SoF defense)"
- 5. Admission by part that K exists
- "*between two merchants, must deny K at time if one merchant sends notice with quantity term that claims K exists"
Risk of Loss Rules
- 1. Agreement controls
- "2. Breaching party is liable for uninsured loss even if breach unrelated to shipment (e.g., ship nonconforming goods, loss on seller)"
- 3. Delivery by common carrier other than seller - Passes at time seller completes delivery obligation (reaches FOB point)
- "4. No agreement, no breach, no delivery by carrier: Merchant seller = buyer's receipt, Non-merchant seller = tender"
Requirements for liquidated damages clause
- 1. Damages hard to forecast at time K made
- 2. Provision is a reasonable forecast
- 1. Irreparable Injury (facts in time-frame)
- 2. Likelihood of success (probability + ask court for bond requirement on P)
- "Same as standard for preliminary injunction, but can be ex parte (no notice, no hearing)"
- 10 days (14 in federal)
- I put five bucks down
- "Inadequate legal remedy (replevin, ejectment, money)"
- Property right/protectable interest
- Feasibility of enforcement (supervision difficult with mandatory)
- "Balance of hardships (more hardship than benefit, skip if D willful)"
- "Defenses (unclean hands, laches, impossibility, free speech)"
- Cha-cha is my favorite dance
- 1. Contract valid
- 2. Conditions on P satisfied
- 3. Inadequate legal remedy
- 4. Mutuality of remedy
- 5. Feasibility of enforcement
- "6. Defenses (unclean hands, laches, unconscionability, mistake, misrepresentation, statute of frauds)"
- Good Dog
- "1. Grounds (formation problem, mutual mistake on material fact, unilateral mistake if other party knows or should know)"
- "2. Defense (unclean hands, laches) negligence not a good defense"
- Very Good Dog
- 1. Valid contract (contrast with rescission)
- "2. Grounds (mutual mistake, unilateral if actually knows, misrepresentation)"
- "3. Defenses (unclean hands, laches) non-defenses include negligence, SoF, parol)"
- not allowed if adversely affects BFP
Constructive Trusts and Equitable Liens
- D must have title for both
- "1. Inadequate legal remedy (for constructive trusts, property is unique)"
- 2. Tracing is allowed (follow proceeds)
- 3. BFPs prevail
- "4. P will prevail over unsecured creditorsChoose constructive trust if value of property up, lien if value down"
- "If D mingles misappropriated money with other D property, then only equitable lien available."
Breach of Promise to Marry
- Not Actionable
- Gifts given conditional on marriage
- Can be recovered if no marriage
Conditions for valid prenuptial
- "1. SoF applies (in writing, signed by both spouses)"
- 2. Must have actually gotten married
- 3. Isn't unconscionable or product of fraud or duress
- "Unconscionability here defined by lack of disclosure of wealth, unforeseen and extreme hardship"
- Lack of counsel is evidence of duress/fraud/unconscionable
- Lack of sophistication is also evidence
- Look to knowledge of forfeiting party understanding his/her rights
- "License (not required, but failure may be misdemeanor)"
- "Ceremony is what counts: requires Officiant, A witness, Exchange of promises (with solemnity)"
Incidents of Marriage
- (tested ones)
- 1. Support spouse financially
- 2. No sex with other people
- 3. Still retain independent legal status
Grounds for annulment (void grounds)
- "Must be things that make marriage automatically void (i.e., voidable not enough)"
- 1. Bigamy
- "2. Consanguinity (Ancestors, Descendants, Sibling whole or half, Lineal relative up or down one (aunt, niece)"
- Still worth clarifying in court even though automatic
- "3rd parties can challenge void marriages (e.g., in intestate distribution dispute)"
Grounds for annulment (voidable grounds)
- "1. Party underage ('nonage,' 18 or older, 16-17 with parental or judicial consent, waived if continue to cohabit when of age)"
- 2. Mental incapacity (waived if cohabit once of sound mind)
- 3. Incurable physical impotence (not fertility!)
- 4. Duress (waived if cohabit after threat passes)
- "5. Fraud (concerning central fact, e.g., religion, procreation or sex, identity of father if pregnant, NOT economic circumstances, is waivable if cohabit continues)"
- Every state now has no-fault ('irretrievable breakdown')
- 1. Adultery
- 2. Desertion (continuous one year)
- 3. Physical/mental cruelty (one time enough)
- 4. Voluntary drug/alcohol addiction
- 5. Insanity after marriage (must show commitment + time)
- Always note to client that no-fault is probably a good route even when fault exists
Defenses to Divorce
- "1. Condonation (waiver of bad conduct, resumption of marital activities)"
- "2. Connivance (i.e., entrapment)"
- "3. Unclean hands (offsetting charge, e.g., adultery)"
- First two should never be used as defense to domestic violence
Legal separation Grounds
- "Same as divorce, just adds 'a mutual agreement to separate'"
- "Used to adjudicate rights while keeping marriage legally intact for insurance, inheritance, survivor benefits, religious reasons"
Jurisdiction for Annulment/Divorce/Separation
- One spouse domiciled in forum for statutory period (90 days IL).
- "Need PJ over other spouse to get orders against that spouse. Despite lack of PJ for orders, divorce will still be honored."
- Out of country divorces discretionarily recognized
- most states use equitable distribution
- "Husband and wife each keep 'separate property' = owner prior + gifts and inheritance in sole name during + appreciation in value of above, active and passive"
- Everything else is marital asset even if not in both names
- This is divided in judge's discretion
Grounds for judge to divide marital property
- Almost anything may count!
- Fault NEVER a factor (contrast with alimony)
- "Health, education, job skill, earning potential, custody of children, contributions made during marriage, duration of marriage"
- Division is final and can't be challenged (contrast with some alimony)
Alimony (spousal support) rules
- "1. Not punitive, not automatic (trend towards smaller, shorter)"
- 2. 'Permanent periodic' most common - modifiable over time
- 3. Lump Sum also used - not modifiable
- 4. 'Rehabilitative award' - provide education and job training
- 5. Fault may be considered
- 6. Terminates on death or remarriage or cohabitation (IL)
- Applied to non-custodial parent
- IL uses percentage tables
- "Continues to 18, 19 if not done with high school (IL)"
- Lifetime obligation if special needs
- Past-due payments not modifiable
- Self-induced reduction in income not ground for reducing
- Death does not excuse - estate must provide
Child support penalties
- Seize assets
- Wage reduction (garnishment - employer must comply)
- Intercept tax refunds
- "Revoke drivers license, sometimes professional or recreational license"
- Contempt of court
Uniform Interstate Family Support Act:
- Orders valid against employers anywhere
- Orders can be registered in other state for enforcement
- First order is valid order so long as either parent or child lives in state - 'continued exclusive jurisdiction'
- (don't confuse with legal separation - where a court decides distribution issues but marriage legally intact)
- "Valid to stay out of court, similar requirements to prenuptial)"
- Any provision involving kids reviewable de novo
- "If merged into divorce decree, modifiable"
- "If incorporated into decree, terms control on modifiability"
Child custody jurisdiction and standards
- Home state of child control (6 consecutive months prior). Order locks in 'continuing exclusive jurisdiction'
- 'Best interests of the child' is basic standard. Very discretionary.
- "E.g., desires of parents, wishes of child if over 12-14, age and health of all parties, new companions of parents, domestic violence, sibling proximity, historic caregiver"
- Very strong presumption for biological parent (defeated only by 'unfitness or extraordinary circumstances')
- Must show 'significant danger to health of child' to block
- Failure to pay child support not a factor (and blocking visitation -> contempt of court)
- Relocation of primary custodian requires prior notice +bona fide reason + court review/adjustment of order
- Visitation of non-parent mandated only if extraordinary cirucmstance
- Best interest of child still basic standard. Stability for child included.
Requirements for a valid trust
- 1. Settlor who makes a
- 2. Delivery of legal title to
- 3. Property to a
- 4. Trustee who holds title for benefit of
- 5. Beneficiary with
- 6. Intent to create a trust for
- 7. a Lawful purpose
- 8. in a Validly executed document
- A bank account in depositors name 'as trustee for' a named beneficiary
- "Depositor may use account as she wishes during lifetime, balance to beneficiary on depositor's death"
- "Revoked by: withdrawal of all money, manifest intent to revoke, by will, death of beneficiary"
- Creditors of depositor may reach it
Uniform Transfers to Minors Act
- Custodian has duties to manage and invest as prudent person
- Pay for minor's needs
- Pay remainder to minor at age 21
- These are not considered trusts (custodian does not hold legal title)
- 1. Must have indefinite beneficiaries
- 2. For charitable purpose
- 3. May be perpetual
- 4. Cy pres can apply
- 5. Attorney General has a duty of representing beneficiaries
- A private trust must have a human beneficiary (but trustee can still carry out objective if they choose)
- "Exceptions:Pet Trusts, Cemetery trusts (both are valid trusts and trustee must carry them out)"
Purchase Money Resulting Trust
- Example of a resulting trust - really an equitable remedy
- When a purchaser put title in someone else's name who is not a relative where no gift was intended (merely some sort of convenience to purchaser)
- Purchaser may compel the title holder to give up title
Spendthift clause validity
- "Must be expressly stated in trust (e.g., no assigning interest, nor shall be reachable by creditors...)"
- Creditors who furnish necessities may reach interest
- Child support and alimony
- Federal tax liens
- "Any interest retained by settlor (i.e., can't shelter own assets from own creditors)"
- Revocable trusts are also reachable by settlor's creditors
Modification of Trusts
- 1. Find the primary intent of settlor regarding material purpose
- "2. Due to a change in circumstances, the specific directions of the trust would frustrate its primary purpose"
Termination of irrevocable/unamendable trusts?
Impossible to terminate unless the power to revoke and amend is expressly reserved
- Must Manage personally (no delegating unless prudent to do so)
- Duty of Loyalty (no self dealing)
- No commingling trust and trustee assets
- Preserve and make trust property productive (diversify as a prudent investor)
Remedies for breach of trustee's duties
- "1. Self-dealing: recover profit made by trustee, affirm transaction, or set aside transaction"
- "2. Commingling: liable for any resulting loss is presumed trustee's, any gain is presumed trust's"
- 3. Improper delegation: trustee liable for amount lost
- 4. Prudent investor/productive property: Trustee liable for losses and lost profit
- Good faith and reasonableness are not defenses for trustee
- "Exculpatory clauses are invalid if cover all liability, bad faith, intentional breach, recklessness, abuse of confidences"
Trustee liability in Contract and Tort
- Personally liable unless contract specifically shields
- "But, trustee entitled to compensation if:"
- 1. Within powers of trustee
- 2. Acting in course of proper adminstration
- Trustees absolutely liable for own torts and trustee's employees' torts. (Cover by insuring at the expense of the trust)
- "Trustee reimbursed if acting within powers, not personally at fault"
Faith and Credit?
- 1.a. Jurisdiction was proper in rendering state
- b. Judgment on merits (default counts)
- c. Judgment final
- 2. No good defense
- "a. Judgment was penal (offense against public, excludes tax)"
- "b. Extrinsic fraud (bribing judge yes, perjury no)"
- "Against recognizing state public policy NEVER a defense, mistakes of law and fact in rendering state NEVER a defense"
Recognition of foreign country judgments
- Comity given same as between states plus roughly met due process:
- 1. Jurisdiction was proper (minimum contacts)
- 2. No sham procedures
Jurisdiction issues with divorce decrees
- Divorce decree jurisdiction where one spouse domiciled (voidable if violated)
- "Check to see if person attacking jurisdiction is estopped (i.e, the people in the proceeding, played meaningful role, children of parties, those who marry or remarry in reliance on it)"
Property and custody awards jurisdiction
- Property: Valid if PJ over spouse whose rights at issue
- Custody: Child's home state (6-mo)
Domicile established by...
- 1. Physical presence
- 2. Intent to be domiciled
- infants: parents (one with custody if divorced)
- incompetents: parents (or domicile of choice if chosen prior to incompetency)
- Three choice of law approaches
- 1. Vested rights (first restatement)
- 2. Most Significant Relationship (second restatement) (IL)
- 3. Governmental Interest
Vested rights approach
- 1. Area of substantive of law
- 2. State the vesting rule
- 3. Indicate winning state
- 4. Indicate result
- Performance (contract performance)
- Injury (torts)
- Situs (real property)
- Situs at time of transaction (personalty)
- Execution (contract formation)
- Domicile of decedent at death (personalty inheritance)
Most significant relationship approach
- Court will apply law most significantly related to outcome:
- 1. Connecting facts
- 2. Policy principles (gov't interest)
- 3. Indicate which state wins
- 4. Indicate result
- "Significant relationship factors for Torts, Workers Comp, Contracts, Property, Family Law,"
- "Torts: Place of injury, place of conduct causing, domiciles of parties, relationship between parties centered."
- "Workers Comp: as administrative tribunal, no choice of law"
- "Contracts: place of negotiation, execution, performance, domiciles, subject matter"
- "(capacity under Rest formation, capacity under Rest 2d domicile)"
- Property: same as vesting rules
- Marriage: divorce - always applies own law
- "legitimation proceeding - state of father's domicile applies, modern trend towards either father's or child's domicile"
Procedural vs. substantive choice of law
- Prodecural: Always own forum rules!
- Substantive you go through the 3 approaches (unless told do one)
- Be ready to go both ways on SoL:
- "SoL are traditionally procedural, except if told of 'borrowing statute' -> use shorter time limit, looking at both forum and other state. If applying another state's law which creates substantive right, use that SoL."
- Modern trend to treat SoL as substantive
Governmental Interest Approach
- "Court will apply own law unless it doesn't have a legitimate interest in outcome. If no interest, it is a false conflict case and the other state's law will apply"
- (forum almost always has some legitimate interest)
Reasons for invalidating choice of law provision
- "1. No reasonable connection with the K (i.e., no minimum contacts, state is selected for no good reason)"
- "2. No true assent (misrep, fraud in inducement"
- "If in doubt, find it invalid...or at least discuss what happens under the default 3 approaches"
Liability of principal for torts committed by agent
- 1. There is a principal-agent relationship
- 2. The tort was committed within the scope of that relationship
Principal-Agent Relationship requires:
- ABCs of agency
- "Assent (informal, must have capacity)"
- Benefit (conduct for principal's benefit)
- Control (power to supervise manner of A's perf)
- Sub-agents and borrowed agents almost never meet this test
Liability for Independent Contractors
- "Generally, do not satisfy ABC b/c lack of control"
- "1. Ultra-hazardous activity, considered non-delegable"
- "2. Estoppel, you held out contractor with appearance of agency"
Within the scope of control or independent contractors in tort liability?
- "1. If within job description, likely within scope"
- "2. Frolics are outside scope, detours are within scope"
- 3. Agent intended to benefit principal -> likely within
Liability for intentional torts of agents
- "Generally outside the scope, so no liability"
- 1. Authorized by P
- 2. Natural from type of job
- 3. Motivated by desire to serve P
Liability for contracts entered by agent?
- P is liable if authorized A to enter contract
- 1. Actual express (oral OK except for land and SoF. revocable unless durable power of attorney)
- "2. Actual implied (necessity, custom, prior dealing)"
- 3. Apparent (P cloaks + 3rd party relies)
- "4. Ratification (P knowledge + benefits, no alteration)"
- Authorized agents not liable unless undisclosed principal
- Duties owed to A by P
- Compensation for its efforts and reimbursement for expenses
Duties owed to P by A
- 1. Duty of care
- 2. Duty to obey
- "3. Duty of loyalty (self dealing, usurping, secret profit) (recover losses and disgorge profits)"
Formation of general partnership
- No general partnership formalities
- "Association, 2+ persons, carrying on, co-owners, business, for share of profit"
Formation of limited partnership and RLLP
- Filing certificate of limited partnership with state incl. names of GPs (All partners may now manage business w/o giving up limited status)
- RLLP: Register statement of qualification with state plus annual reports (makes NO partner liable for business)
Liability to third parties
- General partners liable for all partnership obligations and each other's torts
- Estoppel -> representers are liable as if partners
- Limited partners + registered limited liability partners have limited liability
- Dissociating partners retain liability until notice given to creditors or 90 days after filing notice of dissociation with state
Relationship between partners
- "1. Fiduciaries (Self-dealing, usurp, secret profit) -> accounting (losses + disgorge)"
- "2. Only share of profits is liquid, transferable"
- "3. Absent agreement: equal control, no salary, equal profits, losses like profits"
"Dissolution, Termination, Winding up"
- "Dissolution: absent agreement specifying event, one GP's express intent to dissociate"
- Termination: Actual end of partnership
- "Winding up: Period between dissolution and termination, partners liquidate partnership assets"
Priority of distribution in partnership winding up
- 1. Creditors (outside AND partner-creditors at same level)
- 2. Capital contributions by partners
- 3. Profits and surplus (shared equally absent agreement)
Formation of Corporation (including foreign corps wishing to do business)
- Articles = A PAIN
- 1. Authorized shares (max)
- 2. Purpose (general purpose perpetual duration presumed)*
- 3. Agent
- 4. Incorporators
- 5. Name (some indicia of corp status)
- "* Watch out for ultra vires -> state can enjoin, corp may sue own directors for losses"
Liability of Promoters and Subscribers
- Promoters remain liable until novation and are fiduciaries
- Profit made in deal with company prior to being promoter: profit recoverable only if sold > FMV
- Profit made after promoter: any profit made
- Subscribers -> irrevocable for 6 months
Piercing the Veil
- 1. Alter ego: failure to observe formalities
- 2. Under-capitalization (for foreseeable liabilities)
- Piercing more likely for tort victim than contract claimant
Issuance of stock
- Par value = minimum price
- No par = adequate if deemed so by board
- Treasury stock = always considered no-par
- Acquiring property with par stock = adequate if property deemed valuable enough to satisfy par
- Consequences? Both directors and buyer liable to corp
- Preemptive rights don't exist unless explicit
- 1. Must manage
- 2. Business judgment rule
- 3. Fiduciaries -> Care (prudence unless articles limit) + Loyalty (no unfair benefit unless disclose + independent ratify)
Indemnification of Directors and Officers
- 1. Never for lost suit brought by own corporation
- 2. Must always if won suit brought by anyone
- 3. May if:
- a. 3rd-party won
- b. settlement with own company
- c. director acted in good faith believed action in corp best interest
- "Permissive indemnity decided by any of: majority of ind. directors, majority of committee of ind. directors, majority of shares held ind., special lawyer's recommendation"
Shareholder Derivative Suits
- 1. Corporation could have brought this suit
- 2. Contemporaneous stock ownership (minimum one share from claim arising to end of litigation)
- 3. Must first make demand on directors (they must reject or fail to respond in 90 days. IL: no need if futile)
- "1. right to vote determined by ownership on record date (board sets, within 70 days prior to meeting)"
- "2. Proxy vote ok if writing, signed, directed to secretary, authorizing another to vote, valid for 11 months"
- 3. Quorum is majority of shares
- 4. Vote passes if for>against (you ignore abstentions!)
- 5. Cumulative voting presumed in IL
- Discretionary unless insolvency
- Common -> pay last
- Preferred -> pay first
- Participating -> pay twice
- Cumulative -> add up missed + present
Agreements to eliminate formalities
- 1. Unanimous agreement
- 2. Reasonable share-transfer agreement
- Results in no piercing when formalities ignored
- "Allows possible subchapter S incorp. (taxed like partnership, no more than 100 shareholders, one class of stock)"
Professional Corporation (PC)
- All one profession
- Limited liability (except for own malpractice)
- Must file with name including PC or spelled out
- Hybrid between corp and partnership
- Owners called members
- Same limited liabilities as shareholders
Partnership tax treatment
Must file articles and have some limit on liquidity and life
Fundamental Changes to Corp
- 1. Board resolves
- 2. Special Notice
- 3. Majority of shares (2/3 in IL)
- "4. Dissenter's rights (separate vote if class rights affected, 2/3 in IL, plus right to buy out if gave notice of dissent and voted against)"
- 5. Notice to state
- "Includes merger, consolidation, dissolution, substantial amendment, sale of all or substantially all assets"
- scienter + deception (misrep or insider trade) + actual purchase or sale
- "In private action, investor shows reliance + loss causation"
- Federal 16(b)
- Short-swing strict liability
- "Only big corporations, big shot defendant (officer, director, large shareholder)"
- Anchor sale price and date. Look for a purchase at a lower price within 6 months in either direction.
- Profits become recoverable by corp.
- 1. Only reporting corps
- 2. CEO and CFO certify no falsehoods
- 3. Willfully false -> $5M + 20 years
- "4. If falsity is corrected, corp or derivative may recover officer's incentive benefits and any trading in 12 months following falsity"
- 5. Corp or derivative may also recover trading during black outs