equity

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Reformation: *Reformation means rewriting the contract. There WAS "meeting of the minds" but agreement not accurately reflected in written contract Purpose is to CONFORM to oral agreement. *3 part test: "Very Good Dog" 1) valid contract. 2) grounds for reformation. 3) Defenses
C: Contract is valid: Usually given but DON'T IGNORE. Equity remedy: contract terms must be somewhat more certain than action at law. Show with more certainty and definiteness MAY use parol evidence, Must be consideration
Affirmative mutuality:: involves the argument that P should be allowed to enforce the K b/c D would have been able to- only relevant to land sale K (i.e. S can get SP b/c B would)
FOUR balancing of hardship rules:: 1) Must be a gross disparity. 2) Even then, no balancing if Ds conduct willful. look for extreme example (i.e. addition that only goes a few feet onto Ps property, if willful, no good). 3) *Make sure this is in answer. If you balance hardships, if in favor of D, this DOES NOT MEAN that P loses. P will still get $$ damages!. 4) Hardship to the public is also taken into account. Ex: factory spewing smoke that employs 500 people, only affects one house. Discuss D's hardship Discuss public hardship. Deny the injunction. Award plaintiff damages
Temporary Restraining Orders: Test is identical to test for temp. injunction BUT note, TRO can be issued ex parte. Notice and Adversarial proceeding NOT REQUIRED. Some caveats: P must make good faith effort to notify D Limited to 10 days
G: Grounds for Rescission.: all go to contract formation. mistake (mutual or unilateral), misrepresentation, coercion, undue influence, lack of capacity, failure of consideration, illegality (mistake and misrep most common)
V: Valid Contract:: There is a valid contract, just not correctly reflected in writing
Covenant not to compete:: employment K will not be specifically enforced (see above) But covenant not to compete MIGHT be if: Covenant is reasonably necessary to protect employers interest. How to determine? Services unique Covenant is reasonable as to both geographical scope and duration
Laches:: available if P has unreasonably delayed in bringing an action and delay is prejudicial to defendant. Equitable equivalent of SoL, but unlike SoL, concerned w/ the effect of the passage of time (vs mere passage of time) Clock starts to run when P knows of injury Delay cuts off right to relief when BOTH unreasonable and prejudicial to the def. IF laches apply: consider awarding $$ damages to Plaintiff!! REMEMBER THIS. they were still harmed, just not equitable remedy
Money Damages: Why would they be inadequate?: 4 reasons: 1) Speculative. 2) Insolvent. 3) Irreparable injury note that injury to "unique" property is regarded as irreparable!!!!! (real property always unique) 4) Avoiding multiplicity of actions **tip: they will tell you that there has been a prior history of litigation Tip: easier to show $$ damages inadequate if P is protecting an interest in land, i.e. injunctive relief against nuisance, trespass to land
Which one to choose (equitable lien v. constructive trust?: If property value subsequent to taking goes UP, go with constructive trust (b/c P will receive more valuable property) IF property value goes DOWN, go w/ equitable lien (property in Ds hands is worth less than Ps claim, or where misappropriated $$ used to improve, not acquire title to property. When D's property CANNOT be traced solely to Ps property only an equitable lien is available. Hypo: D misappropriates $$ and uses to remodel house. Since title to home was not obtained by use of $$, proper remedy is equitable lien on it. Won't get constructive trust b/c can't trace proceeds. Equitable lien can be imposed on property that was merely improved w/ Ps property or proceeds thereof. Could sell, get FMV NOT entire proceeds
M: Mutuality of Remedy.: negative OR affirmative mutuality
Temporary injunctive relief:: Issued pending trail on merits. ** P needs relief RIGHT NOW **exam note: when in doubt, permanent.
Deficiencies (seller cannot deliver agreed upon consideration- quantity/quality of land i.e. contract for sale of 1000 acres, turns out at closing that seller only has 998 acres).: 1) Seller as plaintiff: CAN enforce if defect is MINOR. CANNOT enforce if defect is MAJOR UNLESS seller can cure defect before or at closing. 2) Buyer as plaintiff: CAN enforce if defect is MAJOR CANNOT enforce is defect is VERY MAJOR VERY IMPORTANT: if decide that SP should be granted despite defect, MUST include a sentence noting that ct will lower the purchase price: ABATEMENT **Will try and trick w/ a "marketable title" ?. Duty to provide mktable title does not arise until closing. Thus, if closing will result in mktable title (i.e. b/c closing funds will be used to pay off mortgage), NO mktable title prob)
Injunctive relief Definition: Def is ordered (enjoined) to do or refrain from doing something
D: Defenses. Equitable Defenses:: 1) Unclean Hands (same as for injunction). 2) Laches (same as for injunction)). 2) Unconscionability: more than simply making a "bad deal" ***Tested AT TIME OF CONTRACT formation (opposite of uniqueness). Very strict, must be gross unfairness at time contract made.
Two part test: Trade Secret Misappropriation: FIRST, determine that what P has is a trade secret. what is a trade secret? something not generally available to the public which gives its possessor a competitive advantage (use this language) If yes.... SECOND, determine if taken by improper conduct Look to see if stood in fiduciary relationship. If so, easier to find improper conduct Who may be enjoined?? BOTH taker and 3rd person in possession
I: Inadequate legal remedy alternative.: Basic alt: $$ DAMAGES Why $$ damages inadequate? 1) Damages are speculative. 2) Def is insolvent. 3) Multiple suits are necessary. 4) Thing bargained for is unique (this is favorite bar exam issue!)
Trade libel:: issues re: free speech in personal defamations NOT the case here
Conversion/trespass to chattels:: inj relief proper where interference is continuous or the converted chattel is unique
Specific Performance: 2 problem areas: 1) equitable conversion and 2) covenant not to compete
Two common equitable conversion fact patterns:: 1) Death. now who gets what. Say Seller enters into K, dies before closing. Gives real property to B, personal property to L. L gets the $$ (purchase price). Be gets nothing. 2) Damage/destruction: Risk of loss: Majority trend: risk on buyer (unless loss brought by S negl.) Modern trend: risk on seller (unless at time of loss buyer has legal title or possession).
Trespass to land:: consider balance of hardships. Inj relief proper where trespass is continuous
Erroneous Injunction (i.e. laws/facts change): STILL have to OBEY. Have it modified or dissolved
Misrepresentation: Rescission: GRANTED. P must show that they actually relied on misrep
D: Defenses/Unclean Hands: 1) unclean hands. 2) laches. 3) impossibility/free speech
Constructive Trust:: remedy imposed by cts to prevent unjust enrichment when a wrongdoer has gained title to property through misappropriation of another's $$ or property. 1) Defs title must be traceable solely to the misappropriated property. 2) Def serves as trustee, must convey title to P (ct will force). Gives P priority over unsecured creditors. Usual equitable defenses applicable, transfer to BFP terminates Ps equitable right to property
If contract is for personal property:: general rule, personal property is NOT UNIQUE and $$ damages are ok. Exceptions 1) one of a kind or very rare. 20 personal significance. 3) circumstances make chattel unique **Uniqueness tested AT TIME OF LITIGATION not at formation
F: Feasibility of enforcement.: Depends on whether injunction is negative or mandatory Negative is easy: NO enforcement prob BUT Mandatory: MAY be enforcement prob based on: Difficulty of supervision. Concern with effectively ensuring compliance
Rescission: *arguing that there is NO contract b/c no true "meeting of the minds" Purpose is to CANCEL. *2 part test: "Good Dog" 1) Grounds for Rescission. 2) Defenses
Mistake: Mutual mistake: on material fact: rescission GRANTED i.e.: contract for warehouse building, both believe in good condition, in fact ahs major structural probs on collateral fact (quality, desirability or fitness of property for particular purpose): rescission DENIED i.e. another offer to turn warehouse into loft
Constructive trusts and equitable liens: *These can ONLY BE USED when fact pattern indicates that defendant has title to property (look for this)
Mistake: Unilateral mistake:: General rule is that rescission is denied. Exceptions: non-mistaken party knows or should know of mistake. ex: contractor negligently leaves out major cost item. bid is far less than competing bids and is accepted. rescission granted. modern trend: if mistaken party would suffer undue hardship
Equitable Conversion:: in ?, will be clearly valid land sale contract. equitable conversion occurs upon execution SO: Buyer is regarded as having real property interest (specifically enforceable right to the land). Seller is regarded as having the personal property interest (specifically enforceable right to the $$). IN ?s like these, will occur between execution and closing.
Threshold inquiry for injunctive relief: Required to discuss permanent or temporary injunctive relief
Permanent injunctive relief:: issued after FULL TRIAL ON MERITS
Three favorite mandatory injunction patterns:: 1) When act involves application of great taste, skill, judgment. Injunction: DENIED. 2) When series of acts over a period of time: Injunction DENIED. 3) When out of state act required. Where does Def come from?? Resident D: Injunction granted Non-resident D: Injunction denied (modern trend is to grant if there are sufficient contacts) Can decree be couched as negative?? Put that in answer!!
Mistake:: 1) Mutual mistake: reformation GRANTED. 2) Unilateral mistake: reformation DENIED. Exception is where non-mistaken knows of mistake (vs rescission where should have known works)
TWO part test: Temporary Injunctive Relief/Interlocutory Injunction. (preserve status quo): FIRST, establish that there is irreparable injury w/o injunction. TIMEFRAME is key here. SECOND, establish Ps likelihood of success. PROBABILITY is key here
Defenses that WILL NOT WORK:: 1) again, negligence of P does not work. 2) statute of frauds. 3) Parole evidence rule
*6 Remedies: 1) injunctive relief. 2) specific performance. 3) rescission. 4) reformation. 5) constructive trusts. 6) equitable liens
PJ?: Personal jurisdiction over D is required
FOUR Rules to remember re: constructive trusts and equitable liens: FIRST, look for inadequate legal remedy alternative Basic alt: $$ damages. 2 reasons: def insolvent for constructive trust: property is unique; SECOND, tracing is allowed (i.e. trace $$ to bank). THIRD, BFPs prevail over P!! Say D improperly acquired title to B's property, then D sells to L. B CANNOT get it back BUT remember can get $$ back!!!!!! FOURTH, P will prevail over unsecured creditors
Impossibility/Free Speech: If tort is defamation or a privacy publication branch tort (false lights, pvt facts), best exam answer: injunction denied based on free speech
D: Defenses.: 1) Unclean hands. 2) Laches. 3) Note: negligence of a P is NOT a good defense.. If "P was negligent in making contract" is in the answers it is NOT CORRECT. If P entitled to rescission previously rendered performance, can get compensated via RESTITUTION
Nuisance:: consider balance of hardships. Inj relief generally granted only against private nuisance
Who is bound by injunction?: 1) Parties 2) Agents/Eees acting w/ notice. 3) Third persons with notice
P: Property right/protectable interest: Traditional rule: grant equitable relief only where there is a protectable property right. But note: cts will stretch to find existence (i.e. personal defamation, boss might find out, person might love job) VS Modern Trend: Don't even need a property right, a protectable interest is enough (i.e. right of privacy action). *****write about traditional rule AND modern trend
Uniqueness:: If property is unique, even if P received $$ damages, he could not simply go out and buy it. Would not be available. Contract for real property: land is unique. Contract for personal property: not unique, w/ exceptions
B: Balancing of Hardships: Plaintiff's benefit vs Defendants hardship.
*6 part checklist:: SPECIFIC PERFORMANCE "Chacha Is My Favorite Dance" 1) Contract is valid; 2) contract conditions of P must be satisfied. 3) Inadequate legal remedy. 4) Mutuality of remedy. 5) Feasibility of Enforcement. 6) Defenses
Misrepresentation: Reformation GRANTED (innocent OR Fradulent)
If answer is YES, tem injunction: REMEMBER TO MENTION that ct should impose a BOND REQUIREMENT on P to reimburse D in eventuality don't get perm injunction
G: Grounds for Reformation.: Mistake or misrepresentation
FIVE part checklist: PERMANENT INJUNCTION.: "I Put Five Bucks Down" 1) inadequate legal remedy; 2) property right/protectible interest; 3) Feasibility of enforcement; 4) Balance of hardships; 5) defenses/unclean hands
Injunctive relief: when does it apply?: can involve any tort, examiners seem to favor: nuisance, trespass to land, and misappropriation of trade secrets. ** Some tips **
Right to imitate:: no protection for unpatented product. Right to freely imitate unpatented Exceptions: 1) Deception. any deception. discuss trademark infringement 2) Improper taking. imitation accomplished by improper means (i.e. hiring employee). discuss trade secret misappropriation
Contract defenses:: 1) Mistake. 2) Misrepresentation. Statute of Frauds- this is bar exam fave. Spotting the prob: K MUST involve land. K will have been an oral contract Discuss the Rule:. If one has rendered: 1) valuable part performance 2) in reliance on the contract, this will take the case out of the SoF and SP will be granted
Two part test: Trademark Infringement: FIRST, determine that there is a PROTECTABLE TRADEMARK. Usually protectable. generic goods, descriptive terms, geographical designations and personal names NOT entitled to tm protection. (last 3 are if "2ary meaning"). Also, make sure within the scope of protection (usually the case SECOND, determine if there has been an INFRINGEMENT. Test: likelihood of confusion as to source of goods/services. Discuss the similarities (of marks, goods, geographical mktplaces, customers, price). MENTION likelihood of confusion. ****
F: Feasibility of Enforcement.: Only ONE WAY this has been tested: PERSONAL SERVICES CONTRACTS are NOT SPECIFICALLY ENFORCED************ Enforcement prob. Involuntary servitude. Also, if land sale- check to see if parties and/or land are in jurisdiction
Unclean Hands:: party asking for injunction ahs acted improperly in the transaction in question *On exam, look for "bad guy plaintiff": HAS TO BE RELATED TO lawsuit, even if they suck, if not related to lawsuit, this is no good
D: Defenses.: 1) Unclean hands. 2) Laches
liquidated damages clause.: Generally, this DOES NOT make $$ damages adequate. SP still available Exception: WILL NOT get SP if clause provides that this is only remedy.
If contract for real property:: LAND IS UNIQUE!!!!!!!!!!!!!!. trick: ever parcel of land will be made to look alike, D substitutes same or better land. This DOES NOT MATTER. award specific performance. sellers of land CAN get SP even though all they have coming is $$. If seller wants SP, they can get it!
Time of the Essence: what the facts will look like: There will be a land sale contract with EXPRESS time of essence clause Clause WILL contain a forfeiture provision (forfeiture of all performance rendered to date if performance not timely) WILL have been a partial performance (i.e. buyer has made payments towards purchase price). Buyer will have made late payment (triggers time of essence and forfeiture) Buyer brings lawsuit for SP. EQUITY ABHORS FORFEITURES (put this in answer). SO...... RESULT: almost always award specific performance. Some factors: 1) loss to seller is small. 2) tardiness is de minimis. 3) waiver (seller has accepted late payments in past). 4) B would suffer undue hardship Note: ToE strictly enforced if buyer has done nothing yet (vs partially performed)
I: Inadequate Legal Remedy: There are 3 legal remedy alternatives, bar exam fave is money damages: 1) Replevin (inadequate if D could put up a replevin bond for a unique chattel or if change in chattel). 2) Ejectment (inadequate if sheriff refuses to act). 3) Money damages
Equitable Lien:: Imposed on improperly acquired property to which D has title. Property will be subject to an immediate court-directed sale. $$ received goes to P. If proceeds less than FMV, deficiency judgment will issue for difference.
Interference w/ business relationships:: applies to BOTH existing and prospective. inj generally proper when D encourages someone to breach a K w/ or refuses to do business w/ Ds competitor.
Defamation:: look for existence or property right. Equity ct hesitant to enjoin mere libel or slander b/c of free speech rights
Invasion of right of privacy:: consider free speech probs and consider whether there is a property right
C: Contract conditions of P must be satisfied. 2 conditions likely to appear (both land sale K): 1) Deficiencies. 2) Time of Essence
Exception to interference w/ bus rltshp:: privilege. This is a fact question. Most important facts: 1) Persuasion conduct (physical aggression v mere oral suggestion) 2) Relationship btwn parties: Competitors? If D is competitor, may have privilege to induce a refusal to deal but this priv is usually NOT extended to cover inducements to breach a K. 3rd party relationship? if D inducing 3rd party and D has responsibility to 3rd party or financial interest, likely a priv. Tip: harder to get privilege when interfering w/ existing relationship compared to prospective one.
Equity and crimes: Equity WILL NOT enjoin crimes (consider whether crime also a tort though)
Enforcement by contempt:: Equity cts enforce injunctions by holding a non-complying party in contempt and imposing a fine or imprisonment Contempt considered criminal if sanction seeks to punish Normal crim procedures. CanNOT get out of prison Contempt considered civil I sanction seeks to coerce Can get out of prison by agreeing to comply "holds the keys"
Negative mutuality:: P should not be allowed to enforce K b/c if D tried to sue P, voidable K situation i.e. P is someone who lacks contractual capacity (i.e. 17yr old minor). FIRST, determine and discuss that you have a mutuality fact pattern Put in answer: Plaintiff should not be able to enforce this K against me b/c I could not enforce it against him. SECOND, set out the rule: Ct will reject the mutuality argument if it feels secure that the P WILL perform (i.e. assume kid will perform if he is suing you...). THIRD, grant SP BUT in answer have decree provide for simultaneous performance
What is valuable part performance?: Any of these taken together: 1) Payment (in whole or part) 2) Possession 3) Valuable improvements 4) Valuable services

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