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Barbri Spring 2012 Table of Contents

Business Organizations (Partnerships & Corporations) .................................................................................................... 2 Civil Procedure .................................................................................................................................................................. 11 Commercial Papers........................................................................................................................................................... 18 Constitutional Law ........................................................................................................................................................... 28 Contracts ........................................................................................................................................................................... 47 Criminal Law .................................................................................................................................................................... 62 Criminal Procedure ........................................................................................................................................................... 71 Evidence ........................................................................................................................................................................... 80 Real Property ................................................................................................................................................................... 104 Secured Transactions ...................................................................................................................................................... 125 Torts ................................................................................................................................................................................ 133 Trusts ............................................................................................................................................................................... 144 Wills ................................................................................................................................................................................. 150

Business Organizations Partnerships & Corporations I. General Partnerships A. GP Formation 1. An association of 2 or more people who are carrying on as co-owners of a business for profit (a) Profit Sharing Presumption: Contribution of money or capital or services in return for share of profits creates a presumption of a GP (b) No Formalities - conduct alone can may establish the existence of a partnership B. Liabilities of GPs to 3rd Parties 1. Agency Principles Apply (a) Partners are agents of the partnership for apparently carrying on usual partnership business (b) Partnership bound by torts committed by partners w/in scope of partnership business (c) Partnership is bound by Ks entered into by partners with authority 2. General Rule: Each GP is personally liable to 3rd party victims for obligations of the partnership and each partners torts (a) Incoming partners: (i) No direct personal liability for prior partnership debts. (ii) BUT, any money paid into the partnership (as an incoming partner) can be used to satisfy prior partnership debts (b) Dissociating partners (i) retain liability on future debts until notice of dissociation is given to creditors, or until 90 days after filing notice of dissociation 3. Partnership by Estoppel: (a) one who represents to 3rd party that a partnership exists will be liable as if a partnership exists. C. Internal Rights and Liabilities Between GPs 1. Fiduciaries: Partners are fiduciaries of each other, and of the partnership (a) Duty of Loyalty - is owed by partners, as fiduciaries (i) GPs may never engage in Self dealing by receiving benefits to themselves to detriment of partnership; Never usurp partnership opportunities; Never make secret, undisclosed profit, at partnerships expense (ii) ANY of the above give rise to a claim based on a failure of the duty of loyalty (b) Action for Accounting - (remedies for breach of duty of loyalty): GP may bring action against one of its own GPs for breach. (i) May recover losses caused by the breach, AND (ii) may disgorge profits made by the breaching partner 2. Transferability: Partners rights in partnership property and liquidity (a) Specific Partnership Assets: (i) Land, leases, equipment, etc. owned by partnership are partnership assets. (ii) Thus, no individual partner may transfer these assets w/out partnership authority (Illiquid). (b) Partnership Management Rights: (i) Asset owned only by partnership itself. (ii) Therefore, no individual partner may transfer their management right to 3 rd party (Illiquid). (c) Share of Profits and Surplus: (i) Share is personal property, owned as such, by individual partners. (ii) Thus, individual partners may transfer their share of profits freely to 3rd parties (Liquid) (iii) Partnership Property vs Personal Property: TEST: Whose money was used to buy the property? Partnership $ Partnership Property Personal $ Personal Property 3. Management: (a) absent an agreement each partner is entitled to equal control (1 partner = 1 vote) 4. Remuneration (Salary): Page | 2 of 153

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(a) absent an agreement partners get no salary (b) Except: partners receive compensation for helping to wind up partnership business Partners share of profits and losses: (a) Absent an agreement, profits shared equally (b) Absent an agreement, losses are shares like profits (equally)

D. GPs Limited Life: 1. Dissolution: A material change in partnership caused by any single partners expressed will to leave the partnership (a) Partnership at will, (i) Absent an agreement otherwise, dissolution occurs upon notice of express will of any partner to dissociate. (b) Partnership not at will (i) meaning theres an agreement among partners, (ii) Dissolution will not occur unless event specified in agreement has occurred. (c) Winding Up: (i) Period between dissolution and termination in which remaining partners liquidate partnership in order to satisfy creditors (real action of termination) 2. Liability for Winding Up (a) Old Business: (i) Partnership (individual GPs) retain liability on ALL transactions entered into to wind up old business (b) New Business: (i) Partnership (individual GPs) still retain liability even on new business transactions until notice of dissolution is given to creditors or until 90 days after filing statement of dissolution w/State 3. Priority of Distribution - each priority must be fully satisfied before next (a) Creditors: (i) All creditors must be paid includes all outside, non-partner trade creditor, and inside partners who have loaned money (second to outside creditors) (b) Capital Contributions: (i) Capital contributions to partners must be paid (e.g., money put into partnership for start up, etc.) (c) Profits and Surplus: (i) Absent an agreement, profits are shared equally (d) Rule: Each partner must be repaid his or her loans and capital contributions, plus that partners share of the profits or minus that partners share of the losses. II. Limited Partnerships A. Limited Partnership Formation: 1. Partnership with > 1 general partner. 2. Require filing of Limited Partnership Certificate containing name(s) of all GPs. B. LP Liability to 3rd Parties 1. GPs (a) Right to Control and Manage Business (b) Liable for ALL partnership obligations 2. LPs (a) May not manage business without forfeiting LP status (majority rule), BUT under newly revised ULPA, a limited Partner now may manage the business without forfeiting (b) limited liability - not liable for debts and obligations of this business form (similar to shareholder) C. LP Internal Relations 1. Fiduciary Duties: GPs fiduciaries; LPs not fiduciaries 2. Management and Control: GPs may exercise substantial control; LPs have no control 3. Liquidity: GPs interest is relatively liquid; LPs interest is liquid and may be transferred D. LP Dissolution LPs can dissociate freely w/out causing dissolution. BUT, dissolution does occur when GP dissociates, unless ALL partners (GP and LP) agree to continue w/in 90 days of dissociation III. Registered Limited Liability Partnerships Page | 3 of 153

A. RLLP Formation Must register by filing a statement of qualification AND annual reports. GPs and LPs can both become registered by filing B. RLLP Liabilities No partner will be liable for debts and obligations for this partnership form C. RLLP Rights Same rules governing business form. Only difference is that its registered D. RLLP Dissolution (same as regular LP) LPs can dissociate freely and not work dissolution. Dissolution does occur if GP dissociated, unless all remaining partners agree in writing to continue w/in 90 days of dissociation

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Corporations Organization of Corporations A. Formation Requirements: (People, Paper, Act) 1. People: (a) Incorporators: They sign and file the Articles and the Certificate of Disclosure. Can be an entity. 2. Paper: (a) Articles of Incorporation: contract between the corporation and S/H and contract between corporation and the State. Must include: (i) Corporate name including a corporate identifier (e.g. corporated, association, banks, limited company, incorporated); (ii) Corporations address; (iii) Name and address of each incorporator; (iv) Name of an statutory agent (e.g. official legal representative) and address; (v) Can contain the number of initial directors with names and addresses; (vi) Statement of initial purpose (e.g. only the initial business, not what they will ultimately do); Ultra Vires Rules: when the corporation engages in activities outside of its stated purpose in the AOI. Ultra vires contracts are enforceable; S/H can seek an injunction; Responsible individuals are liable to the corporation for ultra vires losses. (vii) Capital Stock Structure; Definitions: Authorized stock (max number of shares the corporation can sell) Issued Stock (number of share the corporation actually sells) Outstanding Stock (shares that have been issued and not reacquired by the corp The articles must set forth: Authorized Stock; # of shares per class; Par value; Voting rights and preferences of each class. At least one class of stock must have unlimited voting rights and at least one class must have the right to receive the corporations net assets on dissolution. (b) Certificate of Disclosure: (i) Must state whether officers, directors, incorporators or those controlling over 10% of outstanding stock have been convicted in the last seven years of felonies like securities or consumer fraud. Also, must state whether members have served as officers, directors or have controlled more than 20% of the outstanding stock in a corporation that is in bankruptcy or receivership. 3. Act: Filing with the Arizona Corporation Commission (ACC) and pay a fee. Upon acceptance for filing, it is a corporation.

B. Legal Significance of Formation of a Corporation: 1. Governed by Arizona law; 2. Separate legal person; may sue and hold property; 3. People who run the corporation are generally not liable for its acts; (a) Limited liability: S/H are only liable for the price of their stock. C. De Facto Corporation/Incorporation by Estoppel: 1. These apply when the corporation fails to achieve corporation status and the party invoking the doctrine is unaware of the defect in corporation. (a) De Facto Corporation can occur when: (i) There is a relevant incorporation statute; and (ii) The parties made a good faith colorable attempt to comply; and Page | 5 of 153

(iii) There was some exercise of the corporate privileges. Treat like a corporation, unless the action is by the State. (b) Corporation by Estoppel: Occurs when: (i) Party deals with business as a corporation; (ii) Deals with business as a corporation. Then the party is estopped from denying the business is a corporation. More likely in Contract than Tort. D. Bylaws: 1. 2. 3. 4. Not required to become a corporation; Adopted by the Board. Can be amended, modified or repealed by the S/Hs or Board. When conflicting provisions, the Articles control over the bylaws.

E. Preincorporation Contracts: 1. The promoter is liable for all preincorporation contracts, unless there is a novation. (a) Novation: an agreement of the promoter, the corporation and the other contracting party that the corporation will replace the promoter under the contract. 2. The corporation is not liable on pre-incorporation contracts until it adopts the contracts by either resolution or accepting benefits of the contract. F. Secret Profit Rule: 1. A promoter cannot make a secret profit in their dealings with a corporation. (a) Profit test: take the fair market value at the time of sale and subtract the price the corporation paid. If there is a profit, promoter has to disclose to avoid liability. G. Foreign Corporations: 1. Must qualify through the ACC to practice business in AZ, if they are transacting intrastate business in the regular course. (a) File documents similar to the Articles. (b) Not needed for occasional or sporadic. 2. Consequences for not qualifying: (contracts still valid) (a) Back fees; (b) Penalty up to $1,000; (c) Corporation cant sue in AZ, but can be sued in AZ. II. Issuance of Stock A. Issuance of Stock: When a corporation trades or sells its own stock. B. Subscriptions: 1. A written, signed offer to buy stock from the corporation. 2. Pre-incorporation subscriptions are irrevocable for 6 months. 3. The corporation becomes obligated under the subscription agreement when the Board accepts the offer. C. Consideration: 1. Consideration for the issuance of stock may be any tangible or intangible property or benefit to the corporation. (a) Future services and promissory notes are not acceptable consideration. 2. The Board may determine the amount of consideration, even if less than par value. 3. Reacquired stock is considered authorized and unissued. 4. When issuing stock for less than par value, the purchaser and Directors who knowingly authorize the issuance are liable. Not 3rd party, if BFP. D. Preemptive Rights: 1. The right of an existing S/H to buy a percentage of stock at every issuance in order to maintain their percentage of ownership. 2. The Articles must provide for preemptive rights. 3. Preemptive rights do not attach if the issuance was made within 6 months of incorporation or if the shares are issued as part of a merger or similar action. III. Directors and Officers A. Directors: 1. Overview: Page | 6 of 153

(a) Board size is usually fix by the Articles or bylaws, but must have at least 1. (b) S/Hs elect directors at an annual meeting. S/H may remove directors with or w/o cause. The Board or S/H can fill the vacancy. (c) The Board may take a valid act in two ways: (i) At a meeting satisfying the quorum and voting rules; or (ii) By unanimous written consent (signature by each required). (d) Two days written notice required for Special Meetings. Lack of notice is waived by attending the meeting. (e) Directors are not allowed to vote by proxy or have voting agreements. (f) Quorum: must have a majority or all directors to act. The act is validated if a majority of the directors present vote in favor. 2. Role of Directors: (a) The Board manages the business of the corporation. (i) Sets corporate policy; (ii) Supervises officers; (iii) Declares distributions; (iv) Recommends fundamental corporate changes, etc. (b) The Board can delegate substantial management functions to a committee of one or more directors. A committee cannot: (i) Amend bylaws; (ii) Fill a Board vacancy; (iii) Authorize a distribution; (iv) Recommend a fundamental corporate change. Fiduciary Duties: (a) Essay: (i) The directors management duties include the duty of care, the duty of loyalty and the duty to protect the interests of the other intracorporate parties. (ii) A director must act in good faith with the reasonable belief that her actions are in the corporations best interest and with the care that a prudent person in a like position would use. (iii) In properly discharging ones duties, a director is entitled to rely on information or opinions from legal counsel or from corporate officers or employees whom the director reasonably believes to be reliable and competent. (b) Duty of Care: care of a prudent person. (i) Nonfeasance (the director does nothing); The director is liable if his breach caused a loss to the corp. (ii) Misfeasance (the director does something that loses money). The director is liable if he does not do appropriate homework (i.e., deliberate or analyze). Business Judgment Rule: A court will not second-guess a business decision if it was made in good faith, was informed and had a rational basis. Independent Judgment Investigation (c) Duty of Loyalty: a reasonable belief that actions are good for the corp. (i) Interested director transactions: these transactions are upheld if: The deal was fair to the corporation when entered; or The material facts and interest are disclose and the deal is approved by either: A majority of all disinterested directors; or A majority of all disinterested shares. The burden of proof is on the Plaintiff to show clear & convincing evidence. The remedy is to set-aside the deal and recover damages from the director involved. (ii) Competing ventures: A director cannot compete directly with the corporation. The remedy is a constructive trust on the profits. Page | 7 of 153

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(iii) Corporate opportunity: A director cannot usurp a corporate opportunity. The director must tell the Board about it and wait for the Board to reject. The remedy is a constructive trust on the profits benefiting the corporation. (d) Which Directors are Liable: (i) Directors are liable for a Board action, unless they object at the outset to transaction of business or their dissent is noted in writing in corp. records. Exceptions: Absent directors are not liable. Good faith reliance on people reasonably believed to be giving competent info. B. Officers: 1. Officers are agents of the corporation. They can bind the corporation by actions taken within their authority. (a) Actual authority: Expressly; by the Articles, bylaws or resolution. (b) Implied authority: By virtue of an actual grant of authority or from office held. (c) Apparent authority: If the corporation holds out an officer as having authority and a 3 rd party reasonably believes that it exists, the corporation is estopped from claiming lack of authority. 2. An officer may hold several positions simultaneously. 3. Officers are selected and removed by the Board. C. Common Law Insider Trading 1. Common law fraud and misrepresentation only covers overt lies. 2. Special circumstances doctrine: insiders with confidential information that an investor would consider important in making a decision cannot trade on such information. The doctrine imposes a duty to either disclose the information or abstain. D. Indemnification of Directors and Officers: 1. Three types of corporate indemnification: (a) No Indemnification: (not applicable to officers) (i) In case by or for the corporation: if the director was held liable to the corporation. (ii) In any other case: if the director was held liable on the basis of improper personal benefit. (b) Mandatory Indemnification: (i) If the director or officer was the prevailing party on the merits or otherwise. (c) Permissive Indemnification: (i) If a majority of the disinterested directors or S/Hs decides that the director acted in good faith with a reasonable belief that their act was in the corporations best interest and the suit is by or on behalf of the corporation, reimbursement is limited to costs and attorney fees. 2. The corporation can advance litigation expenses to the director or officer if they sign a statement saying that they believe they will be entitled to indemnification. 3. The court can order the corporation to indemnify, regardless of these rules. 4. The Articles can limit or eliminate directors liability only for damages to the corporation or S/Hs. IV. Shareholders A. Shareholder Liability: 1. S/Hs are not liable for acts or debts of a corporation unless the court pierces the corporate veil (PCV). Courts will PCV if: (a) A S/H has abused a privilege of incorporating; and (b) Fairness demands that the S/H be held liable. 2. Arizona: courts may PCV to avoid fraud or unfairness. 3. Commingling of funds that result in unfairness, the court might PCV. 4. Undercapitalization: if undercapitalization and lack of insurance, court might PCV. 5. Courts are more willing to PCV for a Tort victim than Contract claimant. B. Shareholder Management of Corporation: 1. Close Corporation: Page | 8 of 153

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(a) Has few S/Hs, shares are not publicly traded and the S/Hs run the corporation. (b) An agreement restricting the power of the Board, and vesting it in S/Hs must be approved by all S/Hs at the time of agreement or in a written agreement signed by all S/Hs and filed with the corporation. (c) Managing S/Hs owe a duty of care and loyalty to the corporation. Statutory Closed Corporations: same as above but has no more than 10 investors. (a) S/Hs in a statutory closed corporation owe each other fiduciary duties. Watch for controlling S/Hs oppressing minority S/Hs. There is a duty not to oppress. (b) A controlling S/H can sell their shares at a premium, but not their office. Controlling S/H cannot sell shares to allow buyer to get to the corporate assets. (c) A controlling S/H is liable if they do not make a reasonable investigation into the buyer and the buyer loots the corporation.

C. S/H Litigation 1. Direct Suit: Shareholder seeks to vindicate her own personal claim growing out of her ownership of stock. Must be a direct injury to the plaintiff as a shareholder. (a) Straight litigation. No extra procedural issues of derivative suits. (b) However, have to show proximate cause for the injury. (c) Very difficult to get to, especially for loss of value of shares. 2. Derivative Suits (a) Requirements to bring a derivative suit: (i) Must own stock; (ii) Must make written demand on the directors to bring suit and wait 90 days; (iii) Shareholders must post bond to ensure that the corporations legal expenses are covered if the suit is unsuccessful. Derivative suits are expensive, and extremely difficult to prosecute. (b) A derivative suit is a S/H suing to enforce the corporations claim; not on their own behalf. (c) The corporation receives the damages and awards from the suit. The S/H receives attorney fees and expenses from the corporation if successful. (d) The corporation can motion to appoint a committee to determine if the suit is in the corporations best interest. If the committee determines that the actions were taken in good faith and the case is not in the corporations best interest, they can move to dismiss. (e) The corporation must be joined as a Defendant. (f) The P can be disqualified if they knew, assented to, or benefited from the corporations activities. (g) A derivative suit cannot be settled or dismissed without court approval. D. Voting 1. 2. 3. 4. The record S/H as of the record date has the right to vote. The corporation cannot vote reacquired stock. Executors and beneficiaries can vote shares. Proxy requirements: (a) A writing; (i) Faxes and emails are okay. (b) Signed by the record S/H; (c) Directed to the secretary of the corporation; and (d) Authorizing another to vote the shares. 5. Voting trust requirements: (a) Written and signed trust agreement controlling how the shares will be voted; (b) Transfer of legal title to the shares to the trustee; (c) The original S/Hs receive trust certificate and retain all rights, except voting. 6. Voting agreement requirements: (a) In writing and signed. They are specifically enforceable. 7. S/Hs can take action at a meeting or by unanimous written consent of all voting shares. 8. If the annual meeting is not held for 15 months, a S/H can petition the court to mandate one. 9. The Board or any other person authorized in the bylaws or Articles can call special meetings. (a) Special meetings to address takeovers of a publicly held corporation can only be called by two or more directors, the president, holders of 10% of the voting shares, or the secretary. 10. Written notice must be given to every S/H eligible to vote 10-60 days before the annual or special meeting. Page | 9 of 153

(a) Notice must contain: when and where the meeting will be held and the must state the purpose. (b) Failure to give notice can result in actions being void, unless the S/Hs waive notice in a signed writing or attends the meeting w/o objection. 11. Quorums: a quorum requires that a majority of the shares entitled to vote are present; a majority of those present may act to bind the corporation. 12. Cumulative voting is only available in voting for directors. (a) The AZ Constitution gives a right to cumulative voting; it need not be in the Articles. E. Stock Transfer Restrictions: 1. They require a S/H to first offer the stock to the corporation for sale. Stock transfer restrictions are upheld if they are reasonable under the circumstances, which means it cant be an undue restraint on alienation. 2. The buyer can be held liable if they have knowledge or notice of the restriction. F. Right of Shareholders to Inspect: 1. S/H can demand access if they have owned the stock for at least 6 months or own at least 5% of outstanding shares. 2. Articles, bylaws, minutes, written communications within past 3 years, names and business addresses of officers and directors and annual report may be inspected if requested in writing at least 5 days in advance. 3. All other documents: S/H must make written demand in good faith, describing the particular documents and stating they are directly related to the purpose, and a proper purpose for inspection. (a) Proper purpose: any purpose related to the role as a S/H (not for officer removal, etc.) 4. If corporation does not allow inspection, S/H can get a court order and recover attorney fees and costs, unless corporation can show refusal was in good faith. G. Distributions: 1. The Board declares distributions (e.g., dividends, repurchase of shares, or redemption of shares [forced sale of corp.]). Shareholders have no right until distribution is declared. (a) Preferred means pay first; (b) Participating means pay again; (c) Cumulative means add up for all the prior years w/o dividends. 2. Controlling shareholders have duty of good faith and fair dealing towards minority shareholders, but duty is discharged if there is a legitimate business purpose for paying or not paying dividends. Only non-legitimate purpose is motivation by personal interest. Paying dividends cannot be compelled and is a business judgment. 3. A distribution is improper if the corporation is insolvent or the distribution renders the corporation insolvent. (a) The corporation is unable to pay its debts as they become due; or (b) Its total assets are less than its total liabilities, including preferential dissolution rights. 4. Directors are personally liable for unlawful distributions, as well as S/Hs who knew the distribution was unlawful when they received it. V. Fundamental Corporate Changes A. Characteristics of Fundamental Corporate Change: 1. Unusual occurrences (merger or disposition of substantially all the assets): requires Board resolution and notice to all S/Hs. (a) Approval must be by a majority of the shares entitled to vote, unless increased by the Articles. (b) A dissenting S/H to buy her shares at fair value, if the S/H files written notice prior to the vote, abstain from voting and after the vote, make a written demand to be bought out. B. Amendment of the Articles: 1. Requirements: (a) Prior Board and S/H approval required, if approved, must file with the ACC. 2. S/Hs have right of appraisal if the amendment materially or adversely affects the S/Hs rights. C. Merger: 1. Requires director and S/H approval, if approved, file with the ACC. 2. No S/H approval is required for short form merger. (a) Short form merger: where 90% or more owned subsidiary is merged into parent company. 3. S/Hs have right of appraisal. 4. The surviving company succeeds to all of the disappeared companys rights and liabilities. Page | 10 of 153

D. Disposition (sale, lease, exchange, mortgage) of all or substantially all of the assets other than in the regular course of business or share exchange (one company acquires all the stock of another): 1. These are fundamental changes only for the transferring corporation. (a) Board approval and transferring corporations S/H approval required. (b) S/H rights of appraisal only for the transferring company. (c) Liabilities: Generally the acquiring company does not succeed to the liabilities of the transferring company. (i) The selling corporation still exists and remains liable for any claims against it. 2. Disguised Merger: However, if the sale was really a disguised merger of the two companies, the purchasing corporation will be liable. (a) A sale of assets will be considered a merger if the purchasing corporation is a continuation of the selling corporation or the transaction is entered into fraudulently to escape debt. If adequate cash consideration is paid, and then its a transfer of assets if transfer is for stock, then it might be a merger. E. Control Share Limitations: 1. An issuing public corporation cannot enter a business combination with an interested S/H (one who holds at least 10% of the corporations stock) for 3 years after they became an interested S/H. 2. An issuing public corporation cannot repurchase shares from the owner of 5% or more of the voting shares for more than average market price in the proceeding 30 days, unless the S/H has had shares for at least 3 years. F. Dissolution: 1. Voluntary: when approved by the Board and a majority of S/Hs entitled to vote. 2. Involuntary or court-ordered: (a) Creditor can petition if the corporation is insolvent and has an unsatisfied judgment; (b) The AZ Attorney General can petition because the corporation has abused or exceeded its authority or fraudulently obtained its Articles. (c) By S/H petition because of: (i) Director deadlock is causing irreparable harm. (ii) Directors are acting illegally, oppressively or fraudulently. (iii) S/Hs are deadlocked and have failed to elect directors for at least two consecutive annual meetings. (iv) Corporate Waste, misapplication or diversion of corporate funds. If the corporation is not listed on exchange, it can buy out the S/H to discontinue dissolution. 3. The ACC can issue a certificate of dissolution for failure to file an annual report, pay fees, failure to maintain a statutory agent for at least 60 days if written notice sent to the corporation. The corporation can seek reinstatement within 3 years. 4. After dissolution and notice to creditors, the corporation goes into winding up. After paying all creditors, they distribute the remainder to S/Hs on a pro rata basis, unless there is a dissolution preference. VI. Choice of Business Essays A. A corporation and an LLP can only be formed by meeting certain statutory requirements, but there are many formal requirements of running a corporation. Unlike Coprs, Ps generally do not have entity status, but are seen as an amalgam of the individual members. B. Generally speaking, each P has a voice in management, cannot transfer her interest, and dissolution occurs when a p dies or leaves the partnership. C. In contract, a shareholder does not hold management rights, can sell her ownership interest and a corporation can have indefinite duration.

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Civil Procedure I. Subject Matter Jurisdiction - SMJ A. Federal Courts: 1. Courts of limited jurisdiction. 2. There must be a jurisdictional basis for each claim filed in Federal Court 3. Two types of jurisdictional basis: (1) Arising Under Federal Law, (2) Diversity 4. Arising under Federal Law: (a) Claim is created by federal law; or (b) Claim is created by state law, but depends on a federal question. (i) The claim must show a right or interest founded substantially on federal law. (ii) The federal issue must appear on Plaintiffs well-plead complaint as part of the cause of action, not merely a defense. Diversity: (a) Requirements: (i) Complete diversity between Plaintiffs and Defendants; and (ii) The amount in controversy exceeds $75K ($75,000.01 or more) (i) Amount alleged in complaint controls. (b) Citizenship: (i) Individuals: a persons citizenship is their domicile; a persons domicile is their true home and where they intend to remain, if there, or return, if not. (i) Domicile is fixed when the lawsuit is filed. (ii) Corporations (Entities): Citizen of the State of incorporation and where its principal place of business is located. (iii) Unincorporated associations: where every individual member is domiciled, even limited partners. (Therefore, almost impossible to have complete diversity with unincorporated associations). (i) Ex: Any organization except corporations; like unions, LLCs, Churches, Partnerships (c) Aliens: (i) Not LPR (Pure): a pure alien may sue a USC or LPR in diversity every time. (ii) LPRs: are treated just like USCs (iii) A USC domiciled outside the U.S.: may never sue or be sued based on diversity.

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Supplemental Jurisdiction: (a) Under Supplemental Jurisdiction, the federal court has discretion to assert federal jurisdiction if there are two claims, and both claims come from a common nucleus of operative fact. (i) If the only primary jurisdictional basis is diversity (support for claim #1), there can never be supplemental jurisdiction over additional claims brought by the plaintiff. 7. Removal: (a) The act of a Defendant in removing an action in state court to the federal court that geographically embraces the state court. Removal is proper if there is federal jurisdiction for claims. (b) Exception: If the only jurisdiction basis is diversity and any Defendant is a citizen of the forum state, cant remove. (c) General Venue Statute Does Not Apply: Venue for an action removed from federal court lies in the district that encompasses the state court where the complaint was originally filed. (Essay Civ Pro A) B. Erie Doctrine: 1. Applies when: (a) Case is in Federal court (b) Resolving a state law / non-federal law (e.g. diversity jurisdiction, supplemental jurisdiction) (c) There is a conflict between a provision of the state law and a provision of the federal law. 2. Rules are: (a) If a federal rule or trial by jury is involved, federal law governs. (b) Otherwise, state law governs where the difference between the state and federal law would materially alter the outcome of the case. 6. Page | 12 of 153

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Personal Jurisdiction (PJ) A. Definition: Personal jurisdiction is the power of a court over the person or property of the Defendant. B. Arizona courts have PJ if both are true: 1. Arizona law grants personal jurisdiction; and 2. The law is Constitutional. C. Under Arizona Law, there are three bases for PJ (need only one to get PJ): 1. Consent: (a) Express: contractual or via agent. (i) Note: Can give express consent for PJ, but not SMJ (b) Implied: Conduct; the defendant fails to object to PJ in a timely manner 20 Days In-state 30 Days Out-of-state 60 Days if D waives process 2. Presence: (a) Dancing: actual voluntary physical presence in AZ at the time of service (e.g. one foot is okay). (b) Domicile: When the defendant is domiciled in AZ (even though they may not presently be in AZ). (c) Doing Business: the regular, systematic, continuous and ongoing business within AZ (e.g. mere solicitation insufficient). 3. Arizona Long Arm Statute: When the Defendant has caused any event to occur within AZ from which the lawsuit derives (e.g. specific connection like contract or car accident).

D. PJ must be Constitutional: 1. PJ is Constitutional if the defendant engaged in such minimum contacts that it would not be unfair (or offend traditional notions of fair play and substantial justice) to assert PJ. 2. The issue becomes whether the defendant has purposefully availed itself of the benefits of AZ, thus invoking the benefits and protections of its law. Put another way, could the defendant reasonably anticipate being brought into AZ court. E. PJ in federal court: In the absence of a federal statute expressly granting PJ, a federal court applies the same PJ law as the State where it sits. III. Service of Process A. Process is proper if: (1) The method of the process is proper under the forums own rules; and (2) the method is Constitutional. B. Proper Methods of Service: Complaint must be serviced upon the defendant within 120 days of filing the complaint. 1. A- Abode service: when the authorized process server leaves the process at the last known abode with a person of suitable age and discretion residing therein. (a) Suitable Age and Discretion: 12 years old (b) Abode: Last usual residence (e.g. not hotel). 2. W- Waiver: where the Plaintiff mails the complaint to the Defendant with a request that the Defendant waive more formal process methods. (Waiver gives additional time for response- 60 days). A- Agent service: when personal service is made on an (1) authorized agent, (2) a managing agent, or (3) partner in partnership of the Defendant. S- State Publication: (Arizona Law) Federal courts can always use state methods. (a) File an affidavit swearing that the Defendants real property is in AZ and related to the lawsuit OR that after due inquiry, the defendant cannot be served or found. (b) Must mail the process to the Defendants last known address, if known. Page | 13 of 153

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4.

(c) Must publish notice once a week for 4 continuous weeks in a newspaper circulating in the area where the action is pending. 5. P- Personal Service: the process server makes hand-to-hand or face-to-face delivery or, if there is evidence that the defendant is truly reluctant, vicinity service; anything within the wingspan or circumference surrounding the defendant (e.g. slipping under the hotel door).

C. Constitutionality: Process is Constitutional if it is reasonably calculated to apprise the interested parties of the litigation. IV. Venue A. Federal venue is proper where: 1. Any Defendant resides, if all Defendants reside in the same State; or 2. Where a substantial part of the claim arose. B. AZ venue is proper: 1. In a county where any Defendant resides. Cant file where Plaintiff resides, or where the claim arose. (a) Exceptions: (DELTA) (i) D - Divorce: Plaintiffs residence is the only proper venue. (ii) E - Entity (actions against): where the claim arose. (iii) L - Land (involving): only where the land is located. (iv) T - Transaction: where entered or to be performed. (v) A - Absent Defendants: if no Defendant resides in AZ, Plaintiffs residence is the only proper venue. (b) Defendant must object to venue in its first responsive pleading. (c) In federal court, Defendant moves to dismiss or transfer, in AZ Defendant files an affidavit requesting transfer. Pleadings A. Requirements: Complaints need not contain facts, only sufficient information to put the adversary on notice of plausible claims or defenses asserted. 1. Exception: Fraud actions must be plead with particularity (specific facts). B. Responsive Pleadings: The following motions will be waived unless they are filed in the 1st responsive pleading (either Answer or a Motion): 1. PJ: Motion to dismiss for lack of PJ; 2. Process: Motion to dismiss for lack of proper service; 3. Venue: Objection to venue. C. Amendments: 1. General Rule: Pleadings may/shall be amended freely to do justice and serve the merits. 2. Relation Back of Amendments to Conform to the Statute of Limitations: (a) New claims: Amendment relates back to the date of the original pleading when the new claims derives from the same transaction or occurrence as the original timely filed claims. (b) New parties: Amendment relates back to the date of the original pleading when (1) the claims against the new party are derived from the same transaction or occurrence as the timely filed claims (2) the party will not be prejudiced in maintaining his/her defense on the merits, and (3) the new party had knowledge that but for a mistake in name, it would have been sued, and that knowledge came about within 120 of the original timely filed complaint. (i) Mistake: must be to attempt to correct a mistake made in naming the wrong party, not adding an additional party plaintiff mistakenly omitted. (See Civ Pro Essay E) VI. Joinder: joining claims and parties to a suit in federal or Arizona court. A. Claims: as many claims maybe joined as Plaintiff has against defendant, regardless of whether there is any connection whatsoever between those joined claims. (There is a presumption in favor of joinder). B. Parties: parties may be joined to an on-going lawsuit if the claims involving those parties derive from the same transaction or occurrence, or atleast the same series of transactions or occurrences. Page | 14 of 153

V.

C. Counter-Claims: claims filed by D against P 1. Permissive: a counter-claim that does not derive from the same transactions or occurrences as the Plaintiffs claims. They may be filed in a separate independent action. (May now, or later). 2. Compulsory: a counter-claim that is derived from the same transaction or occurrence as the Plaintiffs claims. Must file now, or waive the right to bring it later. (Must now). D. Impleader: (3rd party claims) when the defendant may bring a brand new claim against a 3 rd party so long as the 3rd party may be liable to the defendant for all or part of the Defendants same liability to the plaintiff. (D adds D). * Questions: Will not say all or part of liability but rather D seeks to add new party for indemnity or contribution E. Interpleader: The holder of a common fund (e.g. insurance company) may initiate a lawsuit as a plaintiff, and interplead (join as defendants) all liable claimants (e.g. people claiming to be policy beneficiaries) to its common fund. (P adds D). 1. Statutory Interpleader: all needed is minimal diversity and $500 or more in federal court. 2. Minimal Diversity: Any two of rival claimants from different states enough (e.g. 5 claimants, 4 from IL and 1 from AZ). F. Intervention: an act of a non-party in trying to become a party (i.e. intervene) in an on-going lawsuit. 1. Intervention As of Right: the intervener has a right to intervene if it has an interest adversely affected by the litigation and not protected by the existing parties. 2. Permissive: the court has discretion to permit intervention if the issues in the on-going lawsuit and those of the intervener have commonality. G. Indispensable Parties: A party is indispensable (e.g. based on lack of jurisdiction) if her absence is so prejudicial to the existing parties it would prevent the court from rendering an effective judgment, and that the whole action must be dismissed for failure to join. 1. Courts are reluctant to find a party indispensable. H. Class Actions: action in which a named plaintiff represents a class of commonly situated absent plaintiffs. 1. Certification Requirements [CANT]: (a) C- Commonality: common issue of law pertaining to the class. (b) A- Adequacy: the named Plaintiff and counsel will fairly and adequately protect the class. (c) N- Numerosity: the class must be so numerous that joinder would by impracticable (e.g. more than 40). (d) T- Typicality: the claims of the named Plaintiff are typical of the class. 2. Additional requirements for class actions IF seeking money damages: (a) Predominance: the common issues must predominate over the individual issues. (b) Superiority: the class action device is a superior method of adjudicating these claims. Judge must order notice to class and provide right to opt out from action.

3. VII.

Discovery: Material is discoverable if (1) The methods are proper, and (2) it is within the proper scope of discovery. A. Methods 1. Zlaket Automatic Prompt Disclosure: Each party, without awaiting request, must automatically and promptly disclosure within 40 days of response to complaint: (a) Basis: All factual and legal bases for claims or defenses. (b) Documents: All relevant documents. (c) Witnesses: All potential witnesses. (d) Damages: A computation of damages. 2. Duty to Supplement: Each side must automatically disclose any newly discovered information within 30 days of discovery of that information and at least 60 days before trial.

B. Scope: material is within the proper scope of discovery if it is (1) relevant, and (2) not privileged. 1. Relevant: broad liberal relevance; relevant to any part of the claim or defense. Page | 15 of 153

2.

(a) Need not be admissible at trial, as long as it is calculated to lead to admissible evidence (e.g. hearsay evidence okay). Not Privileged: (a) Work product: Material prepared in anticipation of litigation rather than for the ordinary course of business (e.g. attorney product made prior to initiation of litigation is discoverable because not in anticipation). (i) Attorney Mental Impressions: Thoughts or strategies of the attorney are never discoverable. (b) Everything Else: Generally not discoverable unless you make a showing of substantial need for the information, because without it, the party would suffer undue hardship (e.g. witness died).

C. Attorney Actions (See Essay Civ Pro B) 1. Bad Conduct: The court may assess an appropriate sanction against any party or attorney who has engaged in unreasonable, groundless, abusive or obstructionist conduct. 2. Unfavorable Information: A partys or attorneys failure to timely disclose damaging or unfavorable information in response to discovery are grounds for imposition of sanctions, including the dismissal of the claim or defense. VIII. Trial and Related Motions: A. Preliminary Injunction: Order granted to restrain a party from going forward with a course of conduct until the case has been decided. Party seeking the injunction must prove: 1. There is a substantial likeliness of success on the merits of the case 2. They face a substantial threat of irreparable harm or damage if the injunction is not granted 3. The balance of harms weighs in the favor of the party seeking the injunction 4. Grant of the injunction would serve the public interest B. Motion to Change Judges (AZ State Court Motion Only): Motion for right to change one time without showing cause, if filed (1) before the Judge resolves a significant legal right, and (2) at least 60 days prior to trial. Note: However, you can always move to change based on good cause or bias C. Motion for Obligation to Settle: a mandatory settlement conference must be set on the request for any party made at least 60 days before trial or at the courts motion. The court may impose sanctions if a party or attorney fails to participate in good faith. D. Motion for Voluntary Dismissal (Federal and AZ Court Motion): Plaintiff has a one time right to make a motion to dismiss his own lawsuit without prejudice upon refilling. Plaintiff must file before the answer is served (i.e. before the motion to dismiss answer is served). E. Summary Judgment: Request for judgment without trial. Will be granted if there is not material issue or genuine fact for trial. After motion is filed, the burden transfers to the non-moving party to demonstrate genuine issue of fact for trial. (Pre-Verdict) F. Judgment as a Matter of Law (JML): After adversary has rested its case, the other party can move for JML and will be granted if there is no sufficient evidentiary basis from which a reasonable jury could find for the non-moving party. (Pre-Verdict) G. Renewed JML (aka JNOV): Will be granted if there is no sufficient evidentiary basis for a reasonable jury to have found the way they did. (Post-Verdict) 1. Original JML must have been filed; 2. Renewed motion must be filed within 15 days of judgment. H. New Trial: Motion is discretionary with the judge. The court will use its discretion if: 1. Filed within 15 days of judgment; 2. Errors at trial effected the losers rights (e.g. no jury or jury selection botched); 3. The verdict was against the manifest weight of the evidence (less than JNOV standard). I. Motion to Reconsider: a motion to reconsider the courts prior ruling; a party must set forth specific points or matters in which it is claimed that the court erred in its determination of law or fact. Page | 16 of 153

Right to Trial by Jury 1. Must file written demand: (a) Federal: within 10 days of the filing of the complaint or answer. Demand + (b) Arizona: before the day on which the judge/court decides what the trial date will be. $$ Damages 2. Constitutional right: if party wants money damages, they have a right to trial by jury (7A).
= Right to Jury

J.

IX.

Judgments A. Offer of Judgment: formal offer to settle with sanctions attached. 1. The rejecting party will have to pay sanctions (the other sides post-offer costs) if the rejecting party does not get more than the original offer at the close of trial. B. Default Judgments: 1. Definition: a default judgment will be granted when the defendant fails to respond to the complaint in a timely manner. (Courts are not fond of default judgments) 2. Arizona Procedure [ANET]: (a) A- Apply for the default in writing; (b) N- Notice to the Defendant that the application has been made; (c) E- Entry of the default; (d) T- Ten days given to the Defendant to appear and contest the entry of default;

You get a default judgment on liability alone. You must have a prove up at hearing to assess damages. The plaintiff can never get more than alleged in the complaint (e.g. to get attorney fees, the complaint must have included to seek attorney fees).

3.

Motions to Vacate a Default Judgment: will be liberally granted for good cause if filed within a reasonable time of the judgment, but no more than 6 months after the judgment was entered. (a) Good Cause: good cause includes fraud, surprise, mistake or excusable neglect (e.g. fleeing creditors or law suit is an insufficient showing of good cause).

C. Motion for Relief from a Judgment: 1. Time: Must be filed within 6 months of the judgment. 2. Requirements [MEND]: (a) M- Merit: there is merit to your claim or defense. (i) Typically Merits: Motion for Relief could be based on default (if Motion to Vacate fails) , but typically filed for relief from judgment based on merits. (b) E- Equity: equity demands for relief (e.g. due to perjury or fraud). (c) N- New facts: brand new facts have come to light since the judgment that cast doubt on that judgment. (d) D- Due diligence: despite due diligence, the party was unable to discover those brand new facts until after the judgment. X. Finality and Appellate Review A. Finality: 1. 2. 3. Res Judicata (Claim Preclusion): the parties cannot relitigate a claim that has been fairly litigated to a final judgment on the merits. Collateral Estoppel (Issue Preclusion): the parties cannot relitigate an issue fairly litigated to a final judgment on the merits. Finality rule: the parties, but only the parties, are bound by claims or issues that have been fairly litigated against them to a final judgment on the merits.

B. Appellate Jurisdiction: 1. Only have jurisdiction over final orders. A final order is one that leaves nothing to be done in the lower courts. 2. Exceptions: Page | 17 of 153

(a) Partial Final Order: A partial final order is an order that resolves some claims against some parties, but not all the claims against all the parties. A partial final order may be appealed if the lower court finds no just reason for delay. (b) Discretionary Appeals of Interlocutory Orders: if both the lower and appellate courts find that: (i) Doubt: close call whether issue was decided correctly; (ii) Controlling legal issue: entire lawsuit depends on outcome of a legal issue (iii) Appellate review would materially advance the litigation.

Page | 18 of 153

Commercial Papers UCC Article 3 (Negotiable Instruments) and Article 4 (Checks) 1. Form: Determine if it is (1) Note or (2) Check 2. Negotiable Instrument: State applicable law - Art 3 applies to negotiable instruments (notes) and Art 4 applies to checks. 3. Negotiation: Decide if the negotiable instrument was negotiated, (i.e. was there a holder possession & title) go from party to party: (1) issuance state, (2) transfer stage, (3) presentment stage. 4. Was the Holder a Holder in Due Course (HDC)? Value faith - knowledge 5. Potential Defenses: as HDC has real defenses to liability of FAIDS 6. Potential Liabilities: contract, warranty, conversion, dishonor, etc. If check the Properly Payable Rule 7. Recovery Promissory Note Essay: Under Article 3 of the UCC, for an instrument to be negotiable is must satisfy strict rules of formality: it must be in writing, signed by the maker, containing an unconditional promise or order to pay a fixed amount of money, on demand or at a definite time, and contain no additional unauthorized promises or under takings. It must also be made payable to order or to bearer. Assuming the promissory note was a negotiable instrument, P could have enforced it against D. Under article 3, where a negotiable instrument is negotiated to a holder in course, the HDC takes the instrument free of personal defenses and claims and subject only to real defenses. The issue is whether P was a holder in due course (HDC). An HDC is a holder who takes an instrument for value, in good faith, and without notice of any defenses on or claims to the instrument at the later of when the instrument is transferred or when the consideration for the instrument is paid. Check Essay: I. Key Concepts A. Approach: 1. I.D. The Paper 2. I.D. Parties 3. Determine if Instrument is Negotiable? 4. Determine if Instrument was Properly Negotiated 5. Determine if Transferee is HDC 6. Determine Plaintiffs Causes of Action: Contract, Warranty, Tort, or Not Properly Payable 7. Determine Defendants Defenses 8. If D is Liable, May D pass L to another Party? B. ID of Instruments And Parties: 1. Note: (a) A promise to Pay money; 2 party instrument (b) Maker: The Person who Promises to Pay, aka Obligor (c) Payee: Person Entitled to Payment (d) maker[check writer] promises to pay the payee or to the bearer. (e) Certificate of Deposit: (i) Financial Institution acknowledges receipt of money, and (ii) Financial Institution Promises the Payee/depositor to repay the money 2. Draft: (a) An Order to Pay Money; 3 party instrument (b) Drawer Person Ordering Payment (c) Drawee Person to make the payment (if check, then called Payor Bank) (d) Payee Person to Receive the Payment (e) where the drawer[check writer] orders drawee [bank] to pay a payee 3. Check: (a) Requirements: (i) Financial Institution is the Drawee, AND (ii) Payable on Demand (b) Types (i) Ordinary Check (ii) Certified Orinary Check which bank has accepted, aka agreed to pay (iii) Cashiers Check Drawer and Drawee = same bank; person buying the check is Remitter Page | 19 of 153

(iv) Tellers Check: Check drawn by one bank on another bank; person buying the check is a Remitter 4. Remotely Created Item (Demand Draft): (a) Draft not signed by the Drawer but created with the Drawers authority so that a third party can get paid from the drawers account at a bank. (b) Third party is usually a seller in phone or internet transaction or when you pay bills over the telephone by giving creditor your checking account number. C. Indorsement: Signature other than maker, drawer, or acceptor. [Backside of Draft or Note] 1. Special Indorsement: identifies the person to whom it is payable (blank indorsement doesnt). 2. Restrictive Indorsement: limits payment; unrestrictive doesnt (for deposit only). (a) Violating restrictive indorsement is the tort of conversion. 3. Qualified Indorsement: negates secondary liability; unqualified doesnt. (without recourse) 4. Anomalous indicates accommodation (out of chain). II. Rule: where a (1) negotiable instrument is (2) negotiated to a (3) HDC, the HDC takes the instrument free of personal defenses and claims and subject only to real defense.

A. Negotiable Instrument: Refers to the Form of the Instrument and is determined at the time of issuance. Opt-out is okay (non-negotiable) unless it is a check. Opt-in not possible.what is a negotiable instrument? Must be in: 1. Writing (a) Tangible form (e.g., printing, typing) 2. Signed by Maker (Drawer) If Check: 1-8 (a) Anything intended to authenticate (make a signature) (e.g., X, intentional verbal If Note: 1-9 authorization, electronic) 3. Unconditional (a) No express conditions to payment (b) Must be more than a mere acknowledgment of a Debt such as an IOU (c) Presumption of Unconditional Promise or Order (d) Items that Do Not Make Promise or order Conditional: (i) Statement of Consideration (ii) Reference to another Record, e.g. (as to or in accordance with) (e) Items that make promise or Order Conditional (and thus not negotiable): (i) Express condition to payment (ii) Promise or Order subject to or Governed by Another Record (iii) Incorporation of rights or obligations Reference (f) Incorporation by Reference of Items that Would not Hurt Holder (i) Rights Regarding Collateral (ii) Prepayment Right of Obligor to Pay early (iii) Acceleration Right of holder to get paid upon some event (g) Limitation of Payment to a Particular Fund or Source is Okay (h) Countersignatures are okay (i) Consumer Protection Language Okay, even if it has subjet to language, but holder will not become HDC 4. Promise or order (a) Promise: Commitment (cant be an IOU) (b) Order: Directed to pay (not request or mere authorization) 5. To pay a fixed amount (a) Principal must be fixed, but interest rate maybe variable (b) Determine Amount Due (c) Interest (i) Presumption of No Interest; (ii) Ways in which interest may be stated which do not violate the fixed amount requirement Amount of Money Fixed or variable rate Reference to outside source (iii) Failure to State Interest Rate = Judgment Rate 6. Of money (a) Any medium of exchange (e.g., foreign currency okay, but commodity like gold or silver isnt sufficient); not payable in goods or services; Words Prevail or over Figures Page | 20 of 153

7. No other Undertaking or Instruction other than the Payment of Money (a) Except, Promises Permitted: (i) collateral (secured asset) (ii) confess judgment (admitting to fault) (iii) waive legal rights if benefits obligor 8. Payable On demand or at definite time (a) Demand: On Demand, at sight, or is silent (which equals demand) (b) Definite Time: fixed date, after sight or acceptance, time readily ascertainable at the time the promise or order is issues, e.g. a note which provides for payment on the first day of fall 2011 (c) Permitted date change matters that do not prevent instrument from being payable at a dfinite time: (i) Prepayment of Instrument (ii) Acceleration of Due date (iii) Provision in Instrument extending the Due date (See Lecture Notes) -------------------------------------------------9. Must Contain Words of Negotiability - To bearer or to order at time of issue. (a) Order Paper: (i) pay to the order of person, company (b) Bearer: (i) pay to cash, (ii) pay to the order of bearer, etc. (iii) Indication that possessor entitled to payment (iv) No payee Stated (v) Not payable to an identified person (vi) Bear and Order Language: Bearer controls (c) Check: If this element is missing, then no problem B. Negotiated: An instrument is negotiated when it is transferred to a subsequent party who becomes a holder. 1. Holder in Due Course (a) Holder: a person is a holder if they have (i) Possession and (ii) Good Title (i.e. free of forgeries or missing signatures of payee and any special indorsees). (iii) Good Title requires: If Order = Indorsements + Possession If Bearer = Possession (iv) Indorsements: Signature on a negotiable instrument by someone other than the maker, drawer, or acceptor normally on the back of the instrument Blank Indorsements: Payee Signature => creates bearer paper Special indorsement: Payee Signs plus Designates new person to whom instrument payable => Creates Order paper For Deposit or Collection: Restrictive Indorsements limiting what may be done with the instrument Identification of Person to whom instrument payable Intent of Issuer Determines Initial Payee Multiple Payees: And Requires Both; Or req only 1 Other Indorsement Issues: If instrument is transferred for value, Transferee has specifically enforceable right to the transferors indorsement Depository Bank Becomes a holder even if payee deposits check in payees account without indorsing it Payee may indorse with incorrect or real name Payee lacking capacity may effectively indorse. Last Indorsement Rule (when instrument has been indorsed several times) Page | 21 of 153

(v) Mere Holder: Has right to enforce payment

What has the last indorsement made? o If it was a Special Indorsement, it is an order paper o If it was a Blank Indorsement, then it is a bearer paper. Then go to (Good Title Requires)

(b) Due Course: a holder is in due course if: (i) Negotiable Instrument (ii) Holder (iii) Authenticity Not apparently Questioned Instrument does not bear such evidence of forgery or alteration or is not otherwise irregular or incomplete as to call its authenticity into question. (iv) Holder Pays Value Executed consideration Antecedent claim (old debt) Your (depository) bank HDC if value given (v) In good faith Honesty-in-fact (subjective), and Observance of reasonable (objective) commercial standards of fair dealing (merchants test). (vi) Without knowledge or notice at time of acquisition: Cant know the transaction was fraudulent. Later notice is no problem Notice mean Actual Notice; Receipt of notice coupled with a reasonable time to act on the notice. No Notice of the Following: Principle is Overdue (Overdue Interest is not notice) Instrument Dishonored Uncured Default with respect to Paymnet of another instrument issued as part of the same series Unauthorized signature Alteration Any Claim Defense or claim in recoupment (c) Exceptions: transactions precluding HDC status (i) Purchase instrument as part of a Bulk transaction not in the regular course of business (ii) Acquiring instrument by taking over estate (iii) Purchasing instrument at a judicial sale (d) Shelter Rule: (i) The transfer of an instrument vests in the transferee the rights that the transferor Had; (ii) but, person not HDC, simply has HDC Rights; (iii) EXCEPTION: A person who was party to a fraud or illegality cannot get HDC by Shelter (e) Burden: On Person asserting HDC Status or Rights C. Defenses: An HDC takes free from personal defenses and claims, but subject to real defenses 1. Real Defenses - [FAIDS] (a) F: (i) Forgery (forged name it wasnt you) (See Forgery Section) or (ii) Fraud in Factum (Fraud in the Execution) (signed document without understanding it was a negotiable instrument and w/o reas. Time to know it was a nego. Inst.); Merely stating that you signed somethingwithout knowing what it was is not enough; Factors: Intelligence, eduction, business exper., ability to read and understand english (iii) Former Holder Payment: HDC must Provide adequate Notification of Transfer; Adequate: Page | 22 of 153

(b) A: (c) I:

Signed by Transferor or the transferee Reasonably identifying transferred note Providing address for new payments

(i) Alteration (material alternation prove that is was altered and only have to pay the original unaltered amount) (i) Incapacity Infancy Insanity (ii) Illegality (if it would make a contract void, it is void here as well)

(d) D: (i) Duress, (ii) Discharge in Insolvency (bankruptcy) (iii) Discharge with Notice (e) S: (i) Suretyship (e.g. consignor or guarantor) (if notice of suretyship), (ii) Statute of Limitations 6 Years after Due Date of Note (not issue Date) 3 Years after Check Dishonor or 10 Years after Date of Issue 2. Personal Claims and Defenses (a) All claims and defenses other than real defenses, including defenses and claims available in ordinary contract actions (b) Defenses: (i) Failure of Consideration e.g. non-delivery of goods, nonperformance of services (ii) ownership claims, (iii) misrepresentation, (iv) simple fraud (AKA Fraud in the Inducement), (v) breach of contract, (vi) breach of warranty, (vii) payment, (viii) discharge without notice, etc. 3. HDC is free from Claims of Others to the Instrument (a) No claimant can take an instrument from HDC; HDC is a perfect Defendant Maker - Drawer Issue to Payee (Transfers to) T1 T2 T3 Drawee (Bank) or Maker III. Liabilities A. Contract of (Secondary) Liability (Signature is the basis of Liability) 1. Signature by Agents: (a) Binding Principal (i) Follow General Law (b) Binding Agent: (i) Assume agent signs agents name and the principal is bound, is Agent Personally Liable? No Personal Liability If: if Principal is Identified and Signature unambiguously shows it made on behalf of principal Liability of Agent if above two elements not satisfied: To HDC: o Agent is Liable to HDC unless the agent proves the HDC had Notice of the representative capacity To None-HDC: o Agent is L to a nonhodler in due course unless agent can prove that original parties did not intend the agent to be liable (ii) Special Rules for Check No L if Principal name on Check (c) Agent not Authorized: = Forgery; Principal not bound 2. Maker of Note: (a) Primary Liability: Page | 23 of 153

3.

4.

5.

6.

(i) Maker must pay instrument when due according to its terms at the time it was issued (or when incomplete at the time completed) (b) Liable to Holder or Indorser who Paid Instrument (c) Defenses: Maker may raise defenses: Effectiveness depends on status of holder Drawer of Draft: (a) Disclaiming Liability: (i) No Disclaimer of Liability on a check (ii) may disclaim Liability on other Draftes (b) Secondary Liability: (i) Drawer Liable only after two conditions are first satisfied: Presentment to Drawee Within 30 Days Dishonor: Drawee refused to pay the instrument upon proper Presentment Indorser of Note or Draft: (a) Liability Disclaimer (i) Allowed (b) Order of Liability: (i) Indorsers are liable to each other in the order of their signatures (c) Secondary Liability (i) Indorser Liable only after three conditions are first satisfied: Presentment (within 30 days of indorsement) Dishonor, AND Notice of Dishonor (within ___****____ days of Dishonor) Drawee (a) General Rule: (i) Drawee makes no negotiable instruments contract (b) Acceptance or Certification (i) Drawee may agree to pay the draft by signing the draft (ii) Drawee has no obligation to accept a draft and cannot be sued for failing to accept; (iii) certification discharges the drawer and all prior indorsers (c) Final Payment: (i) Once a drawee bank finally pays a check, contract actions (e.g., the drawers and indorsers contracts) may no longer be pursued and the drawee bank may not recover one the check from the persons it paid unless there is a breach of a presentment warranty. (ii) Final Payment occurs when the Drawee bank pays the item in cash or does not revoke a provisional settlement by the midnight deadline, that is, midnight of the next banking day after the banking day of receipt. (d) Conversion Tort Liability if Drawee Pays on Forged Indorsement (i) Drawee who pays on forged indorsement is Liable to the payee in conversion (ii) Person suing in conversion must have received of the instrument. (iii) No conversion action if check never reaches payee because it was lost in the mail. (e) Payments of Check after the Drawers Death (i) Drawee bank may continue to pay check until it __ that the drawer has died and has a reasonable opportunity to act on that knowledge (ii) Drawee may pay for no more than __ days after notice (iii) Drawee must comply with demand to stop paying by someone claiming an interest in the account Accommodation Parties (a) Definition: (i) A person who signs an instrument to lend his or her credit to another party but who does not receive any direct benefit, i.e., does not receive any of the borrowed money. (b) Liability: (i) L in capacity in which accommodation party signs; no special contract. (ii) Presumed to be a guaranty of Payment. (c) Limiting Liability to Collection Only (i) The accommodation party may include express language limiting the contract to a guarantee of collection only. Page | 24 of 153

(d) Reimbursement: (i) If the acoommodation party pays the instrument, the accommodation party is entitled to reimbursement from the accommodated party (maker, indorser) (e) Demonstrating Accommodation Status (i) Express Language (ii) Anomalous Indorsements An indorsement by a person who was not the Holder of Instument, i.e., an indorsement outside of the chain of title, is notice of its accommodation character. 7. Effect of Qualified Indorsement (a) If without recourse is written, then indorser cannot be sued, and does not have liability. B. Warranty Liability 1. Intro: (a) They are implied Warranties, thus arise Automatically (b) Warranty Liability is OFF the instrument since warranties are created by Transfer or presentment, not the indorsement of the instrument (c) To use the warranty, Possession of the instrument is not needed as it is for contract liability (d) Warrantly Liability survives final payment of an instrument 2. Transfer Warranties: (a) Who makes Warranty? (i) Transferor who receives consideration makes the warranty (gifts are insufficient) (b) To whom are Transfer Warranties made? (i) Immediate transferee, and (ii) Subsequent Transferees if Transferor Indorsed (iii) Note: Drawee and Maker can never sue for breach of transfer warranty they get instruments presented to them, not transferred (c) Transfer Warranties: (i) Warrantor is entitled to enforce the instrument (ii) All signatures are authentic and authorized (iii) No alteration (iv) No good Defenses Against Transferor the Instrument is not subject to any defenses which could be successfully asserted against the transferor. Thus, transferor warrants that if transferor were Plaintiff on the instrument, no defense that anyone has could defeat transferor. PERFECT PLAINTIFF (v) No knowledge of Insolvency Proceedings the warrantor has no knowledge of insolvency proceedings against the maker, acceptor, or drawer of an unaccepted draft; this is the only warranty where the warrantors lack of knowledge is relevant (vi) If remotely created item, the person identified as the drawer actually authorized the item. (d) Disclaiming Warranties: (i) Checks no disclaimer (ii) Nonchecks Disclaimer okay 3. Presentment Warranties (a) Made on Presentment do not confuse presentment warranties and transfer warranties. They are mutually exclusive (b) Who makes them: (i) Presenter; and (ii) Previous transferors (c) Made to Parties who pay in good faith: Makers, Drawees or Acceptors (certified check) (d) Warranties when unaccepted draft presented to drawee (i) Warrantor entitled to enforce the Draft or Obtain Payment (ii) No Alteration (iii) No knowledge of Unauthorized Drawers Signature (iv) If remotely-created item, that person Identified as the Drawer authorized the item (e) Warranty when Other instruments presented: (i) Warrantor entitled to enforce draft or obtain payment. 4. Warranty Vs. Indorsers Contract: (a) To know whether to sue indorser for breach of warranty or for breach of indorsers contract, Determine the I.D. of the Plaintiff

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(i) Plaintiff is Holder: If Payo has not paid the instrument (e.g., a check bounces or a promissory note is not paid by the maker), then the holder will sue the indorser on the Indorsement Contract (ii) Plaintiff is Payor: If the payor has paid and later discovers the payor should not have paid (e.g., the check was forged or the note was altered), then the payor will attempt to sue the indorser for Warranty (transfer or presentment, as appropriate under the fact) C. Other Issues 1. Discharge by Holder (a) Holder may discharge obligation by surrendering instrument to obligor, destroying it, canceling it 2. Effect of Instrument on Underlying Obligation (a) Payment by certified check, cashiers check or tellers check = underlying obligation discharged as if person paid in cash. (b) Uncertified Check and Notes Underlying obligation Suspended (i) If check or note later paid, underlying obligation discharged (ii) If check or note is dishonored, holder may sue on either instrument or underlying obligation. 3. Failure to Produce Original Instrument (a) Examples: Original lost, inadvertently destroyed, or stolen (i) Enforcement by Person not in possession Person was entitled to enforce when loss occurred Loss not due to transfer or lawful seizure, and Person cannot reasonably obtain original (ii) Protection for Payor Required, e.g. security of bond 4. Overdraft (a) Bank may charge customers account even if the charge creates an overdraft 5. Postdated Check (a) Bank may pay postdated check unless customer gives bank a notice of the postdating which describes the check with reasonable certainty. 6. Stop Payment Orders: valid if customer has (a) identified item and (b) gives bank notice. (c) oral order is valid for 14 days, (d) written valid for 6 months. 7. Payment in Full Check (a) Def: A check (or accompanying communication) on which the drawer conspicuously indicates that cashing the check acts as payment in full of an existing obligation which is unliquidated or subject to a bona fide dispute (b) Effect: The payment in full check operates as an accord and satisfaction if the payee cashes the check (c) Exception: (i) Payee returns money within 90 days (ii) Payee is an organization and had previously notified the drawer of a particular person or address to send payment in full checks IV. Cause of Actions by Holders Against Drawee A. None. There is no liability unless acceptance item (e.g. certified or cashiers check) 1. If Acceptance Item: (a) Obligation discharged with check is paid. (b) Liable for only consequential damages Cause of Actions by Drawer Against Drawee (Bank & Customer Relationship - Contractual Relationship) A. Relationship: Drawer puts money in drawee [drawee acts as agent for collection], and drawee pays out according to drawers order. B. Properly Payable Rule: bank must pay checks that are properly payable, and not pay checks that are not property payable. Essay Two: The issue is whether the bank is liable for paying the forged indorsement where the drawer issues the check to an imposter. Under Art 4 of the UCC , a drawee bank has a duty to its customer to pay out only as the Page | 26 of 153

V.

customer orders. Thus, if a bank pays out on a forgery, the customer can generally get the bank to recredit the customers account because the bank did not pay out according to the customers order. However, there are several exceptions to the general rule where the bank might not be held liable because of the customers negligence in contributing to the forgery. Where the drawer issues a check to an imposter, the resulting forgery by anyone in the name of the payee is effected to pass the right to enforce. 1. Wrongful Dishonor: (a) Where drawee doesnt pay, but should have (because it is properly payable), drawee is liable to drawer for wrongful dishonor. (b) Payee cannot sue Drawee (c) Drawer may recover damages (d) Drawees Defense: Would have overdrawn the Drawer. (e) Drawees Defense: Check is more than 6 months old 2. Wrongful Honor: (a) Where drawee pays, but shouldnt have, drawee is liable to drawer for breach of contract. (Presumptions are in favor of bank) (b) Stale Checks: (i) checks that are 6 month old or older. Bank can pay in good faith, but doesnt have to. (c) Post-Dated Checks: post dating is valid if the customer has (1) given the bank notice, and (2) and identify the item. If this an oral order, it is valid for 14 days, and if written, valid for 6 months. (d) Checks Paid after Drawers Death: are payable until bank knows of death of drawer and has a 10 day window to continue to pay checks subsequent to receiving knowledge. (e) Overdraft: are properly payable, but bank is not required to pay. This area is usually regulated by contract. Forgeries and Alterations: A. determine whos signature was forged B. Forged Makers Signature: 1. Forged maker Not Liable, unless ratification occurred 2. Forger is Liable C. Forged Drawers Signature 1. Alleged Drawer not Liable 2. Drawee bank must re-credit alleged drawers account as check was not properly payable unless drawee bank has a defense 3. Bank is unable to pass on loss, unless breach of presentment warranty. 4. Banks Defenses to Re-crediting (defenses to the alleged drawers not properly payable action): (a) Drawers Negligence substantially contributes to the forgery (b) Bank Statement Rule Duty to Inspect Statement (i) General Rule: Customer (drawer) has duty to inspect bank statement and canceled checks in timely manner and report forgeries to bank. If customer does not and bank can prove a loss beyond original mistaken payment, customer precluded Warning: Forged drawers signatures must be reported to bank within 1 year regardless of banks or customers negligence. (ii) Repeat offender rule: If the same person is forging a series of checks, the drawer must report the forgeries within 30 days of when the statement was available. If the drawer does not do so, the bank will not recredit the account for the subsequent forgeries by the same person. D. Forged Indorsement: Where the bank pays on a forged indorsement, payment is not final and the bank may recover from the wrongful party whom it paid. 1. Bearer paper: (a) Since indorsement is not necessary to negotiate bearer paper, forgery of an indorsement is irrelevant (b) Order Paper: Forgery Breaks the chain of title and check is not properly payable. Accordingly, the drawer may demand that the drawee bank recredit the drawers account as the check was not properly payable. 2. Breach of Warranty of Presentment: this warranty is made by the presentor to all the payees and subsequent transferees. Warrants: (a) Good Title (b) No Material Alteration (c) No Knowledge of Drawers Signature is Unauthorized Page | 27 of 153

VI.

3. Situations where a party is Precluded from Asserting Forgery Of Payees Name (a) Imposter Rule: (i) Drawer/maker estopped to deny validity of forged indorsment (ii) Maker or drawer is deemed to have acted carelessly in issuing the check and thus to have contributed to the forgery (b) Fraudulent Indorsement by employee Payee Estopped (i) If an employer entrusts an employee (or independent contractor) with responsibility with respect to an instrument and the employee makes a fraudulent indorsement, the indorsement is effective. Payee is estopped to assert the forgery. 4. Liability of Drawee (a) Conversion Liability to Payee: Payee can sue the payor bank ( as well as the depositary bank and non-bank converters) for conversion or (b) Drawee Protected from Double Liability: A successful conversion action against drawee by payee will eliminate drawers not properly payable action (c) Bank Defenses: (i) Imposter Rule (ii) Fraudulent Indorsement (iii) Drawers Negligence (iv) Failure to Timely Sue (Drawer must sue within 3 years in not properly payable action) 5. Liability of Presenter: (a) The Drawee Bank can then sue the presenter and those prior to the presenter for breaching the presentment warranty of entitled to enforce (the forged indorsement broke the chain of title so no one could become a holder. 6. Liability of Transferor: (a) The presenter who loses to the payor for breach of presentment warranty of good title may sue entities further up the chain for breach of the various transfer warranties of : (i) Entitled to enforce (ii) All signatures authentic or authorized, and (iii) No good defenses E. Alterations obligor does not want to pay because the instrument was altered 1. Change in Obligation: (a) HDC: may enforce for Original Amount 2. Unauthorized Completion (a) HDC may enforce as completed (b) Holder = Obligor Liable under Original Term 3. Effect on None-HDC: (a) Fraudulently made by Holder = total discharge of Obligor (b) Not Fraudulently made by Holder = Obligor Liable under Original Terms 4. Not Properly Payable: (a) Rule: An altered check is not properly payable (b) Banks Defenses: (i) Negligence (ii) Bank Statement Rule: Drawer must report alteration within 1 year 5. Breach of Transfer and Presentment warranties of no Alteration F. Warranties and similar theories apply to other instruments (like bill lading, etc). G. Exceptions: May validate forgery or alteration precluding (either in whole or part) a customer from asserting that bank violated Properly Payable Rule. 1. Fictitious Indorsements are Treated as Valid: (a) By Imposters (b) By Employees responsible for checking writing who forge signatures 2. Drawer is negligent in the drafting (e.g. writing checks in pencil) 3. Drawer is negligent by not timely notifying the bank. (a) Forged drawer- 1 year; (b) Forged indorsement- 3 years; (c) Multiple forgeries by the same person- 30 days. 4. Common Law Preclusions (a) Ratification (b) Authority (e.g. given someone permission to sign checks for you) (c) Estoppel (e.g. if you sign my checks for twenty years, and then have 20 years say they cant sign) Page | 28 of 153

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Constitutional Law Actors: 5 actors who can appear in a Con Law question. Who the actor is will tell you what the issues are. Congress: does it have authority to act, and is it violating a limit on its power (DP, EP, 1A) Prez or Executive: does it have authority to act, and is it violating a limit on its power (DP, EP, 1A) Federal Courts: does it have authority to hear case State/Local Government: has the government violated limit on its powers (can do anything except what is prohibited) Private Entity: is there government action, and if so, is it violating the constitution (DP, EP, 1A) echemerinsky@law.uci.edu I. The Federal Judicial Power: (Art. III) A. Requirements for Cases and Controversies [limits to judicial power (aka judiciability)] 1. Standing: Standing is whether the P is the proper party to bring a matter to the court for adjudication. The o have standing, a person must show injury, causation, and redressbility. (a) Injury: (i) Ps may only assert injuries (past or future) they have personally suffered Example: Sierra Club case to save lands from Disney (ii) Ps seeking injunctive or declaratory relief must show likelihood of future harm to the Plaintiff himself (e.g., LA chokehold case) Tip: which of the following Ps has the best standing? SC doesnt find one P has better standing that others. Look for Q where the P has personally suffered an injury (e.g. $$ loss). (b) Causation and Redressability: Plaintiff must allege and prove that the Defendant caused injury so that a favorable court decision will likely redress the harm caused. (i) Rationale: prohibition of advisory opinions (c) No third party standing: P cannot assert claims of others of 3rds parties who are not before the court. (Both P must have standing, and the 3rd party must meet one of the exceptions). (i) Exception: allowed if theres a close relationship between Plaintiff and injured third party Ex: father did not have standing for daughter that he did not have legal custody of. Ex: Doctor/patient ok (ii) Exception: allowed if the injured 3d party is unlikely to be able to assert his/her own rights (iii) Exception: associational standing: organization may sue for its members if: Members would have standing to sue The interests are germane to the organizations purpose Neither the claim nor relief requires participation of individual members of the organization. (d) No Generalized Grievances: Plaintiff cannot sue solely as a taxpayer or citizen (i) Example: Statement of Accounts case re: CIA books (ii) Exception: taxpayers can challenge government expenditures as violating the Establishment Clause (b/c EC was meant to be a limit of government expenditures). The taxpayer standing exception is not applicable to a discretionary spending decision issued by the executive branch. Ripeness: whether federal court may grant pre-enforcement review of statute or regulation (usually comes up when a P is seeking declaratory judgment) (a) Factors: (i) Hardship: The hardship that will be suffered without pre-enforcement review (ii) Fitness: The fitness of the issues and the record for judicial review (e.g. does the fed court have all it is needs to effectively decide this issue) (b) Example: FDA generic labeling case; hardship = $$; fitness = purely question of law Mootness: case dismissed as moot if events after filing the lawsuit end the Plaintiffs injury (a) Live: Must be a live controversy or ongoing injury (b) Exception: wont be moot if wrong(s) capable of repetition but evading review (e.g., Roe v. Wage) Page | 30 of 153

2.

3.

(c) Exception: wont be moot if voluntary cessation (if D voluntarily stops/halts offending practice, but is free to resume) (e.g., racial profiling). (d) Exception: wont be moot if class action suits (if any one member of class has ongoing injury). 4. Political Question Doctrine: federal courts wont hear or adjudicate these types of cases (e.g., these should be left to the political branches) and will be dismissed if: (a) Republican: The republican form of government clause- Art. IV Sec. IV (e.g., voter initiative process) (b) Prez Foreign Policy: Challenges to the Presidents conduct of foreign policy (e.g., treaties) (c) Impeachment: Challenges to the impeachment and removal process (e.g. Walter Nixon v. US) (d) Gerrymandering: Challenges to partisan gerrymandering (drawing election districts to maximize seats for political party)

B.

Supreme Court Review 1. Almost all cases come to the Supreme Court by writ of certiorari (discretionary review), including those from state courts and US Courts of Appeals (a) 3 Judges: Appeals from decisions of 3-judge federal district courts appeal not discretionary (b) Between States: Supreme Court has original & exclusive jurisdiction for suits between states (c) Ambassadors: SC has original jurisdiction over suits involving ambassadors 2. Final Judgment Rule: Supreme Court may only hear cases after final judgment of highest state court, US court of appeals 3. Only Federal Ground: To hear state decision, may not be independent and adequate state law ground of decision. Thus, Supreme Court reversal of federal law ground must change result. (a) Example: LA police beating, P claims 4A violation and state battery claim and is entitled to same damages under either; they can only seek review regarding 4A violation. Lower Federal Court Review 1. Federal courts (and state governments) may not hear suits against state governments (a) Sovereign immunity: (i) 11A bars suits against states in federal court, (ii) Sovereign immunity bars suits against states in state courts (b) Exceptions: states may be sued in the following circumstances: (i) When state waives sovereign immunity Waiver must be explicit (ii) States may be sued pursuant to laws adopted under 5 of the 14A Rationale: 14A came after 11A, and was seen as limit on state power (iii) Federal government may sue state governments (iv) Bankruptcy proceedings (c) Suits against state officers are allowed (for injunctive relief or for personal liability for $ damages) (i) State officers may not be sued if it is the state treasury that will be paying retroactive damages. 2. Abstention: federal courts may not enjoin pending state court proceedings (e.g., fed court will abstain from enjoining AZ state court case on suit against bar bri).

C.

II.

The Federal Legislative Power A. Congress Authority to Act 1. May act if there is express or implied Congressional power (a) There is no federal police power, unlike with states, except with laws about: [MILD] (i) Military (ii) Indian reservations (iii) Federal Lands (iv) District of Columbia 2. Necessary and Proper Clause - Art. I 8: Congress may choose any means not otherwise prohibited to carry out its authority (e.g. congress may raise $ for army or navy they can have a bake sale). 3. Taxing and Spending Power: Congress may tax and spend for the general welfare (a) Tip: Q answer is congress and general welfare only choose if regarding taxing, spending or police power exceptions. Other answers will be wrong. Page | 31 of 153

4.

Commerce Power: Congress may regulate: (i) Channels of interstate commerce (e.g., places where commerce occurs like highways and waterways) (ii) Instrumentalities & persons or things in interstate commerce (e.g. things for commerce, like trucks and planes) Example: Man Act (taking women across state lines for sex) (iii) Activities that have substantial effect on interstate commerce (e.g., wheat case). But, noneconomic activity cannot be aggregated to judge the cumulative effect or impact. Example: Violence Against Women Act (US v. Morrison) 10A is a limit on Congressional power (a) Congress cant compel state regulatory or legislative action (i) Example: background checks for firearms; taking title to nuclear waste (ii) But, Congress can induce state action with strings on grants as long as conditions are expressly stated and relate to the purpose of the spending program Congress can condition federal aid in return for implementation of new curriculum (b) Congress may prohibit harmful commercial activity by states governments (e.g., selling DMV lists) Congress Power under 5 of the 14A (a) Congress cant create new or expand existing rights. It may only act to prevent or remedy violations of existing rights. Regulations must be proportionate and congruent to remedying constitutional violation. (i) Example: Supreme Court struck down RFRA in City of Bourne Congress Power under 13A: (a) Neither slavery nor involuntary servitude shall exist within the US and give Congress the power to adopt appropriate legislation to enforce the proscription. 13A is not limited to state action; Congress may adopt legislation regulation private parties to prohibit conduct that is a badge or incident to slavery.

5.

6.

7.

B.

Delegation of Powers 1. Congress has unlimited power to delegate legislative power (a) Exception: cant take powers from another branch (e.g. like legislating executive power to itself) (but congress can give away) (b) Tip: wrong answer if delegation of legislative power 2. Legislative vetoes and line-item vetoes (Prez attempts to veto only part of bill) are unconstitutional (a) There must be (i) bicameralism (house and senate) and (ii) presentment (giving to president to sign) to veto bill (b) Legislative veto: when Congress attempts to overturn agency action without bicameralism and presentment are unconstitutional (e.g. overturning executive action)

III.

The Federal Executive Power A. Foreign Policy 1. Treaties (a) Definition: agreement between US and foreign country negotiated by President and effective when ratified by the Senate (b) Treaties prevail over conflicting state laws (c) If a treaty conflicts with a federal statute, last one adopted prevails (last in time) ** (d) If a treaty conflicts with US Constitution, it is invalid 2. Executive Agreements (a) Definition: agreement between US and foreign country effective when signed by president and head of foreign nation (i.e., senate does not need to approve senate agreement) (b) Executive agreements can be used for any purpose (c) Executive treaties prevail over existing state laws, but not federal laws or the Constitution Page | 32 of 153

Treaties Executive Agreements

Senate approval required? Yes No

Conflicts with State Laws Treaty Controls Executive Agreement Controls

Conflicts with Federal Statute Last in Time Federal Statute Controls

Conflicts with Constitution Constitution controls Constitution controls

B.

(d) President has broad power as Commander-in-Chief to use American troops in foreign countries. (i) This is first a political question, and should be dismissed. If not, Pres wins Domestic Affairs 1. Appointment and Removal Power (a) Appointment power (i) President appoints ambassadors, federal judges, and officers of the US (senate must approve) (ii) Congress may vest appointment of inferior offices in the President, heads of departments, or the lower federal courts Tip: Inferior officers can be fired by another officer (iii) Congress may not give itself or its officers appointment power (b) Removal Power: pres may fire any executive branch office unless limited by statute (i) Congress can limit removal power, but must be office in which independence from the President is desirable (e.g., Nixon special prosecutor) (ii) Congress cant prohibit removal; can only limit where theres good cause 2. Impeachment and removal: (a) President, VP, federal judges, and officers can be impeached and removed for treason, bribery or for high crimes and misdemeanors. (i) Impeachment does not remove a person from office; (ii) Impeachment by House requires majority vote (iii) Conviction in senate requires 2/3 vote to remove from office Civil Suits: President has absolute immunity to civil suits for money damages while in office (a) But no immunity for acts prior to taking office (e.g., Clinton v. Jones) Executive Privilege: President has executive privilege for presidential papers and conversations, (a) Except where there are other overriding important governmental interests (e.g., criminal prosecution & Nixon) Pardon: President has the power to pardon those accused or convicted of federal crimes (a) Doesnt extend to (i) state crimes or (ii) to civil suits (b) Person who has been impeached cant be pardoned for that which hes been impeached.

3. 4.

5.

IV.

Federalism: limits on state/local government power because of existence of federal government A. Preemption 1. Supremacy Clause of Art. VI provides that Constitution and laws/treaties made pursuant to it are the supreme law of the land 2. Express Preemption: when Congress says that federal law is exclusive (as long as congress can act), state laws are preempted. 3. Implied Preemption: (a) If federal and state law cant exist together (mutually exclusive), federal law controls (i) Exception: state may set environmental standards stricter than federal law unless Congress explicitly prohibits Page | 33 of 153

4.

(b) If state law impedes achievement of federal objective, state law is preempted (e.g. state denies benefits to those who are following fed objective) (c) If Congress evidences clear intent to preempt (e.g., immigration laws), state is preempted. States may not tax or regulate federal government activity (inter-governmental immunity) (a) Its unconstitutional for federal government to pay state tax out of treasury (b) States cant regulate federal government if it places a significant burden on federal government (e.g., federal government doesnt have to comply with stricter state environmental laws, even though states can regulate private state actors)

B.

Dormant Commerce Clause & Privileges and Immunities Clause of Article IV 1. Definitions (a) Dormant Commerce Clause: state or local law is unconstitutional if it places an excessive/undue burden on interstate commerce. (i) Tips: Remember to look at who is the actor - state or congress Negative implications of commerce clause = dormant commerce clause (b) Privileges / Immunities (i) Art IV Privileges and Immunities Clause: no state may deny citizens of other states of the privileges and immunities it accords its own citizens. Essentially an antidiscrimination clause against out of staters. (ii) 14A Privileges or Immunities Clause: always a wrong answer unless the question involves the right to travel (e.g. CA law unconstitutional which discriminated against new resident in favor of older residents thereby discouraging travel). 2. 3. Does state law discriminate against out of staters? Analysis if a law doesnt discriminate (a) Privileges and Immunities Clause of Article IV doesnt apply (b) If law burdens interstate commerce, it violates the dormant commerce clause if its burdens exceed its benefits (e.g., Illinois mudflaps case) Analysis if law discriminates against out-of-staters (a) If law burdens interstate commerce, it violates dormant commerce clause unless it is necessary to achieve an important government purpose (i) Exception: Congressional approval (i.e., once congress acts, commerce power is no longer dormant state action) (ii) Market Participant Exception. State/local government may prefer its own citizens in receiving benefits or dealing with government-owned businesses. Example: state universities may charge less for in-staters b/c government benefit Example: state-owned cement factory can charge in-staters less as a market participant (b) If law discriminates against out-of-staters with regard to their ability to earn a livelihood, it violates the Privileges and Immunities Clause of Article IV, unless necessary to achieve important government purpose (i.e. no less discriminatory objective can achieve its goal) (i) Citizens = US citizens (ii) Example: diff. cost for shrimp boat licenses violates P&I clause (iii) Example: diff. cost for elk-hunting licenses didnt violate, b/c its a hobby Dormant Commerce Clause Doesnt require discrimination against out-of-staters (only state law burden on interstate c) Requires burden on interstate commerce Corps and aliens can sue under dormant commerce clause Exceptions: (1) congressional approval and (2) market participant exceptions Privileges and Immunities Clause Does require discrimination against out-of-staters (ability to earn living) Requires discrimination with regard to civil liberties or important economic activities Corps and aliens cannot sue thereby use the privileges & immunities clause No exceptions. Page | 34 of 153

4.

C.

State Taxation of Interstate Commerce 1. States may not use tax systems to help in-state businesses (a) Example: state laws favoring dairy products are unconstitutional 2. State may only tax activities if theres a substantial nexus to the state 3. State taxation of interstate commerce must be fairly apportioned Full Faith and Credit: Courts in one state must give full faith and credit to judgments of courts in another state, so long as: 1. Court that rendered judgment had jurisdiction over the parties and subject matter 2. Judgment was on the merits 3. Judgment is final

D.

V.

Structure of the Constitutions Protection of Individual Liberties A. Is there government action? (aka State Action Doctrine) 1. Government Conduct: The Constitution only applies to government action (private conduct neednt comply) 2. Congress may apply constitutional norms to private conduct by statute (a) 13A: 13A 2 can be used to prohibit private race discrimination (i) Note: only slavery violates 13A directly, but private race discrimination can violate congressional regulations made pursuant to 13A. (b) Commerce Power: can be used to apply constitutional norms to private conduct (i) Example: Ollies BBQ case can prohibit discrimination in public places. (c) 14A 5: Congress cannot use 14A 5 to regulate private behavior (i) Ex: Morrison 3. Exceptions: situations where private conduct must comply with the constitution (a) Public Function Exception: Constitution applies if a private entity is performing task traditionally and exclusively performed by government (i) Example: Marsh v. Alabama (in favor of Jehovah witnesses against company town) (ii) Example: private voting organizations are performing govt task (iii) Example: Jackson Case private utility company must not apply due process not traditionally govnt task (b) Entanglement Exception: Constitution applies if the government affirmatively authorizes, encourages, or facilitates activity private behavior must comply with constitution applies. (i) There is State Action:(typically race cases) Courts cannot enforce racially-restrictive covenants Government leasing premises to racially discriminating restaurant State providing free books to racially discriminating private school Private entity regulating interscholastic sports within state (ii) There is No State Action: Private school fired teacher based on speech (even if 99% funded by government) if government didnt encourage firing NCAA ordering suspension of bball coach at public U. State grant of liquor license to racially discriminating private club (iii) Government subsidy is not sufficient to make the constitution apply

B.

Application of the Bill of Rights 1. Applies directly only to the federal government 2. Applied to state/local governments through incorporation into the due process clause of the 14A. All rights have been incorporated except: (a) 2A right to bear arms (right to self protection and militia) (b) 3A right to not have soldiers quartered in a persons home (c) 5A right to grand jury indictment in criminal cases (d) 7A right to jury trial in civil cases (e) 8A right against excessive fines Levels of Scrutiny Page | 35 of 153

C.

1.

Rational Basis Test (a) Plaintiff must demonstrate that a policy is not: (i) rationally related to a legitimate government purpose (doesnt look at actual purpose, only that there is no conceivable purpose) Intermediate Scrutiny (ex: Gender) (a) The government must show that the policy: (i) is substantially related to the achievement of an important government purpose (court will look only at actual purpose or objective) Means chosen dont need to be the best way, or the least restrictive way. Strict Scrutiny (ex: Race) (a) The government must show that its policy (i) is necessary to achieve a compelling state interest. (i.e., actual purpose is important (crucial, vital)) (b) If this is proved, the government must then demonstrate that it is (i) is narrowly tailored to achieve the intended result. (i.e., means chosen must be least restrictive.) Means Ends Legitimate (conceivable) purpose Important (actual) purpose Compelling (actual) purpose Least Restrictive Alternative No No Yes (must be narrowly tailored) Who has Burden of Proof Challenger Government Government

2.

3.

Rational Basis Intermediate Scrutiny Strict Scrutiny

Rationally Related Substantially Related Necessary

VI.

Due Process A. Procedural Due Process: procedures that the government must follow when it takes away life, liberty or property. The DP clause of the 14A provides that the government shall not take a persons life, liberty, or property without due process of the law. DO contemplates fair process and procedure, which requires at least an opportunity to present a challenge to the action to a fair and neutral decision maker. Property under the 14A includes personal belongings and money. In this case. To determine the procedure that the government must provide in order to comply with the 14A requires a balancing test. The government must balance the importance of the interest of the individual and the government and the ability of additional procedure to increase the accuracy of the fact finding. 1. Has there been a deprivation of life, liberty or property? If yes, go to 2. If no, you need not provide procedural due process (a) Definitions: (i) Deprivation of Liberty: occurs if there is the loss of significant freedom provided by the Constitution or a statute. Example #1: Except in emergency, adult can be institutionalized must be notice and a hearing Page | 36 of 153

Example #2: When parent institutionalizes a child, there must only be screening by a neutral fact finder. Example #3: Harmed reputation (by itself) is not a deprivation of liberty. Example #4: Prisoners do not have a right of liberty. (ii) Deprivation of Property: occurs if there is an entitlement and that entitlement is not fulfilled. No Rights/Privileges: No rights/privileges distinction anymore (tip: if you see this as an answer, its wrong). Entitlement: entitlement exists if there is a reasonable expectation of continued receipt of a benefit. Example #1: employment contract for 1 yr; government has to provide due process if broken because of reasonable expectation of continued receipt. (b) Intentional Government Conduct: Government negligence isnt sufficient for a deprivation of due process. There must be intentional government action, or at least reckless action for liability to exist. (i) Shocks the Conscience: In emergency situations, government can be held liable if its officers behavior shocks the conscience even if it wasnt intentional. (c) Failure to Protect: Governments failure to protect people from privately inflicted harms doesnt deny Due Process. (i) Exception: Government only has duty to provide protection if person is physically in government custody or if government creates the danger. (ii) Example: DeShaney v. Winnebago County Dept of Social Services: failure to respond to complaint of child abuse didnt deny DP. 2. What Procedures are Required? (a) Balancing Test: (i) The importance of the interest to the individual (ii) The ability of additional procedures to increase the accuracy of fact-finding (iii) The government interest in administrative efficiency

Welfare: Before welfare benefits terminated, must be notice and hearing Social Security: When social security disability benefits are terminated, only must be post-termination hearing School Discipline: When student is disciplined by a public school, there must be notice of charges and opportunity to explain. No hearing Exception: corporal punishment does not require any due process. Paternal Rights: Before parental rights can be permanently terminated, there must be notice and a hearing. Punitive Damages: Punitive damage awards require jury instructions and judicial review. Grossly excessive punitive damages violates DP (BMW v. Gore) Enemy Combatant: American citizen detained as enemy combatant must be given DP (Hamdi) Government Seizure: Except in exigent circumstances (e.g. reason to believe that someone was going to get rid of property), prejudgment attachment, or government seizure of assets, must be preceded by notice and hearing. Note: government may seize property used in illegal activity, even if it has innocent owner. (Michigan prostitute) Substantive Due Process: asks whether government has adequate reason for taking away a persons life, liberty, or property. SDP is used to safeguard privacy and for economic liberties. Page | 37 of 153

B.

1.

Economic Liberties: Constitution provides only minimal protection for economic liberties (a) Rational Basis: Only rational basis test is used for laws affecting economic rights. (i) Example #1: In Lochner era, laws interfering with freedom of contract got strict scrutiny. Since 1937, rational basis review has been used, and government usually wins. (ii) Example #2: Practice Trade -If people claim law infringes on right to practice trade, rational basis review. (b) The Takings Clause - 5A: government may take private property for public use, but it must provide just compensation. [1-2 questions] (i) Is there a taking? Possessory Taking: government confiscation or physical confiscation of property is always a taking. Example: Loretto v. Teleprompter - government requiring space on apartment buildings for cable boxes was a taking, even though amount of property small. Regulatory Taking: if government regulation leaves no reasonable economically viable use of the property. Not a taking simply because it reduces the value of property. Example #1: Penn Central v. NYC - Grand Central classified building as historical building, decreasing the value of investment. This was found not to be a taking. Example #2: Lucas v. South Carolina Coastal Council: law prevented any development of property. Owner sued and won.

Note #1: Government conditions on the development of property must be justified by benefit that is roughly proportionate to the burden imposed; otherwise its a taking. Note #2: Property owner may bring takings challenge to regulations that existed at the time the property was acquired (e.g., zoning ordinances). Note #3: Temporarily denying use of property is not a taking as long as government action is reasonable (e.g. Lake Tahoe: owner couldnt develop for 3 years because of environmental study. He lost).

(ii) Is it for public use? Definition: Taking is for public use so long as government acts out of reasonable belief that the taking will benefit public (is so broad that virtually any use will meet standard) Kelo v. New London: government operating out of reasonable belief that new jobs and economic growth was a public use. If not for public use, government must give property back. If for public use, the go to iii. (iii) Is just compensation paid? Measured in terms of loss to owner in reasonable market value terms. Gain to government taker is irrelevant. (c) The Contracts Clause Art I 10: no state shall impair the obligations of contracts (i) Applies only To state or local interference E.g., This clause never applies to federal government. Federal government can only be challenged under DP rational basis review. With existing contracts E.g., This clause doesnt limit ability of government to regulate future contracts that havent been entered into. (ii) Scrutiny: Page | 38 of 153

Intermediate Scrutiny: State or local interference with private contracts must meet intermediate scrutiny. Does the legislation substantially impair a partys rights under an existing contract? If so: is the law a reasonably and narrowly tailored means of promoting an important and legitimate public interest? Strict Scrutiny: State or local interference with government contracts must meet strict scrutiny. (iii) Ex Post Facto: The ex post facto clause doesnt apply in civil cases. Definition: This is a law that criminally punishes conduct that was lawful when it was done or that increases punishment for crime after it was committed. Ex: government interfering with existing contracts. Wrong answer would be that its limited by the ex post facto clause. Retroactive civil liability: Retroactive civil liability only need meet rational basis. Bill of attainder: law that punishes or imprisons persons without a trial. These are unconstitutional. (d) Arizona Distinctions: (i) Child Labor: is prohibited. (ii) Union: a person shall not be denied employment for failure to join a union. (iii) 8 Hours: 8 hours is a full work day. 2. Privacy: is a fundamental right under substantive Due Process. This is an umbrella used to describe a number of liberties. Strict scrutiny used. Fundamental Rights: (a) Right to Marry (b) Right to Procreate (e.g. can only require sterilization if SS can be met) (c) Right to Custody of Ones Children: (i) Must show compelling reason to terminate custody. (ii) State may create an irrebutable presumption that married womans husband is the father of her child (e.g., Michael H. v. Gerald D.) (d) Right to Keep the Family Together (includes extended family) (e) Right to Control the Upbringing of Ones Children (i) Example #1: Parent choosing parochial school is ok (ii) Example #2: Court ordering grandparent visitation over parental objections not ok (f) Right to Purchase and Use contraception (e.g. Griswold v. CT) (g) Right to Abortion (e.g. Roe v. Wade; Casey changed law) (i) Prior to Viability: government cant prohibit abortion. Government can regulate abortions so long as it doesnt create undue burden on ability to obtain abortions (this replaced strict scrutiny as the test). Not Undue Burden: 24-hour waiting period for abortions isnt a undue burden Requirement that abortions be performed by licensed physicians isnt an undue burden Prohibition of partial birth abortions is not an undue burden. Supreme Court upheld Federal Partial Birth Abortion Ban. (ii) After Viability: states may prohibit abortions unless necessary to protect the womans life or health (iii) No Duty to Fund: Government has no duty to subsidize abortions or provide abortions in public hospital. (iv) Consent and Notice: Spousal consent and notification laws are unconstitutional. Parental notice and consent laws for unmarried minors are constitutional, as long as theres an alternative judicial approval process. (h) Right to Private Consensual Homosexual Activity (e.g., Lawrence v. Texas) Page | 39 of 153

(i) Court didnt say which level of scrutiny should be used. (i) Right to Refuse Medical Treatment (i) Competent adults have the right to refuse medical treatment, even if it will save their life (ii) A state may require clear and convincing evidence that a person wanted treatment terminated before it is ended. (iii) State may prevent family members from terminating treatment for another. (j) No Constitutional Right to Physician-assisted Suicide (e.g. Washington v. Luxburg) 3. Right to Bear Arms - 2A: the 2A protects rights of private individual to bear arms, and it is not limited to just militia. (a) Court didnt say which level of scrutiny should be used. (b) Not absolute right (e.g. not in schools or airports; mental illness may limit right) Right to Travel (a) Strict Scrutiny: Laws that prevent people from moving into a state must meet strict scrutiny. (b) Durational Residency: requirements must meet strict scrutiny. (e.g., to receive welfare, must be there 1 year) (i) Voting: 50 days is the maximum allowable requirement (c) Restrictions on foreign travel need meet only the rational basis test. Right to Vote (a) Strict Scrutiny: Laws that deny some citizens the right to vote must meet strict scrutiny (i) Poll taxes (fees to vote) are unconstitutional (ii) Property Ownership: requirements are not allowed for voting or holding public office. The only place where property ownership is constitutional is with regard to a water district. (iii) Photo ID: requirement for photo id for voting upheld (b) 1 Person 1 Vote: One-person one-vote must be met for all state and local elections. Thus, all districts must be about equal in population. (c) At-large Elections: where all voters vote for all of the office holders, are constitutional unless there is proof of a discriminatory purpose. (i) Example: City of Mobile v. Bolden: every voter cast the same # of votes as the number of spots. Supreme Court upheld this, despite discriminatory effect (given majority of population was white). (d) Racial Districts: The use of race in drawing election districts (even to benefit minorities), the government must meet strict scrutiny. (e) Uncounted Votes: Counting uncounted votes without standards in a presidential election violates equal protection (Bush v. Gore) Education: There is no fundamental right to education. (a) Arizona: disparities in school funding violate the state constitution. [Protected Rights and Due Process] Rational Basis Intermediate Scrutiny Strict Scrutiny Means Rationally Related Substantially Related Necessary Ends Legitimate (conceivable) purpose Important (actual) purpose Compelling (actual) purpose Right Economic Liberties Gender Private Contracts Race Privacy Voting Travel

4.

5.

6.

VII.

Equal Protection: whether the governments differences in treatment of people are adequately justified. A. An Approach to Equal Protection Questions Page | 40 of 153

1. 2. 3. B.

What is the classification? What level of scrutiny should be applied? Does the law meet the level of scrutiny?

C.

Constitutional Provisions Concerning Equal Protection 1. 14A State Only: Equal protection clause of the 14A applies only to state and local governments (14A never applies to federal government) 2. 5A Federal: Equal protection is applied to the federal government through the DP Clause of the 5A 3. Rules are the same, regardless of federal, state, or local government Race and National Origin Classifications 1. Level of Review: Strict scrutiny is used 2. How is existence of racial classification proven? (a) On its Face: May exist on the face of the law (law on its terms draws distinctions) (e.g., blacks may not serve on juries). (b) Facially Neutral: If law is facially neutral, proving racial classification requires demonstrating both (1) discriminatory intent and (2) discriminatory impact. (i) Example #1: Washington v. Davis - DC had requirement that prospective police officers must pass test, which whites passed more than blacks. Discriminatory impact wasnt enough to make it unconstitutional needed intent as well. (ii) Discriminatory use of preemptory challenges based on race denies equal protection. 3. Benefit: Racial classifications benefiting minorities (a) Level of Review: Strict scrutiny is applied. (b) Numerical Set-Asides/Quotas: require clear proof of past discrimination. (i) Example #1: Richmond Virginia set aside 30% of public works money for minority-owned businesses. Struck down. (ii) Example #2: US v. Paradise: Alabama State Police had engaged in intentional race discrimination. Essentially 50% set-aside, which was upheld as remedy for clear past discrimination. (c) Affirmative Action: Educational institutions may use race as one factor among many in admissions decisions to help minorities. (i) Universities may not add points to admission scores solely on the basis of race. (ii) Cannot set aside slots on basis of race. (d) Seniority Systems: may not be disrupted for affirmative action. Gender Classifications 1. Level of Review: Intermediate scrutiny is used. But, only allowed if there is an exceedingly persuasive justification. 2. How is the existence of gender classification proven? (a) On it Face: Face of law (e.g., only men can attend VMI) (b) Facially Neutral: If facially neutral, proving gender classification requires demonstrating both discriminatory intent and discriminatory impact. (i) Discriminatory use of preemptory challenges based on gender denies equal protection. 3. Benefit: Gender classifications benefiting women (a) Level of Review: Intermediate scrutiny is used. (b) Not Okay: Those classifications based on role stereotypes prohibited (i) Ex: Alabama statute saying that women can be awarded alimony, but men cannot, because its based on stereotype that men are dependent on their husbands. (ii) Ex: laws that say women are entitled to survivors benefits, while men have to prove economic hardship are prohibited (c) Okay: Gender classifications designed to remedy past discrimination and differences in opportunity are allowed. (i) Ex: Law saying that women could go for longer in Navy without promotions. This is to compensate for differences in opportunities, and is constitutional. Alienage Classifications 1. Level of Review: (a) Strict Scrutiny: (i) Is used, generally. Page | 41 of 153

D.

E.

(ii) Ex: state laws saying that only US citizens could have civil service jobs or be admitted to the bar are unconstitutional (b) Rational Basis: (i) Is used for alienage classifications that concern self-government and the democratic process Government may discriminate against non-citizens with regard to voting, serving on jury, being police officer, teacher, or probation officer (e.g. notary publics dont have anything to do with self-government SS needed). (ii) Congress has plenary power to regulate immigration. Rational basis is used for Congressional discrimination against aliens. (c) Intermediate Scrutiny (kinda): (i) Children: is used for discrimination against undocumented alien children (e.g. education of undocumented children; Plyer). F. Legitimacy Classification: Discrimination against non-marital children 1. Level of Review: Intermediate scrutiny is used. 2. Laws that deny a benefit to all non-marital children, but grant it to all marital children, are unconstitutional. (a) Ex: only marital children can inherit from their fathers are unconstitutional Other Classifications: 1. Level of Review: Rational basis review is used for all other types of discrimination under equal protection. In these areas, the government wins. (a) Age Discrimination: usually involves mandatory retirement law. (b) Disability: (e.g. City of Cleburne - zoning regulation against group home) (c) Wealth: poverty is not a suspect class (d) Economic Regulations (e) Sexual Orientation Discrimination (e.g. Romer v. Evans) [Protected Rights and Equal Protection] Rational Basis Means Rationally Related Ends Legitimate (conceivable) purpose Class Alienage (government) Age Disability Wealth Economic Sexual Orientation Non-Marital Children Gender Alienage Race

G.

Intermediate Scrutiny Strict Scrutiny

Substantially Related Necessary

Important (actual) purpose Compelling (actual) purpose

VIII.

The First Amendment A. Free Speech Methodology 1. Content-Based v. Content Neutral laws (a) Content-Based Restrictions: on speech must meet strict scrutiny. Two types of content-based laws: (i) Subject matter restriction: application of the law depends on the topic of the message (e.g., speech being allowed on some topics (e.g., labor) but not others, strict scrutiny applied, and was found unconstitutional). (ii) Viewpoint Restrictions: application depends on ideology of speech (e.g., pro-war demonstrations allowed, but anti-war demonstrations not allowed. This is a viewpoint restriction, and would fail strict scrutiny). (b) Content-Neutral Restriction: burdening speech need only meet intermediate scrutiny (e.g., no parades allowed in City Park.). 2. Prior Restraints: judicial order or administrative system that stops speech before it occurs Page | 42 of 153

(a) Court Orders: Court orders suppressing speech must meet strict scrutiny. (i) Procedurally proper court orders must be complied with until they are vacated or overturned. A person who violates a court order barred from later challenging it. This is different from person violating a statute or ordinance. (ii) Gag orders on the press to prevent prejudicial pretrial publicity are not allowed (e.g. highly publicized trial court puts gag order; answer is prior restraint is unconstitutional). (b) Government Licenses: The government may require license/permit only if there is an important reason for licensing and clear criteria leaving almost no discretion to the licensing authority. (i) Schemes must contain procedural safeguards like prompt determination of request for license and judicial review. 3. Vagueness and Overbreadth: laws prohibiting speech must be clear. (a) Vagueness: unconstitutionally vague if a reasonable person cant tell what speech is prohibited and what is allowed. (i) Ex: law prohibiting sales of corrupting books. This was overly vague. (b) Overbreadth: overbroad if it regulates substantially more speech than the Constitution allows to be regulated. (c) Example: (i) Fighting Words: fighting words laws are unconstitutionally vague and overbroad. These are words directed at another that will likely invoke violent response. Fighting words are not protected by the 1A 4. Symbolic Speech (a) Government may regulate conduct that communicates if it has an important interest unrelated to suppression of the message and if the impact on communication is no greater than necessary to achieve the governments purpose (e.g. beating up bar exam people to express dislike for bar exam). (b) 5 examples: (i) Flag-burning is constitutionally-protected speech (ii) Draft card-burning is not constitutionally-protected. Government has important interest in ensuring people had their draft cards to facilitate emergency deployment. (iii) Nude dancing is not protected speech (iv) Burning a cross is protected, unless its done with the intent to threat or intimidate. (v) Contribution limits in an election campaign is constitutional; expenditure limits are unconstitutional. Anonymous Speech: right to choose not to speak and disclose identity is protected (e.g., woman unconstitutionally arrested for distributing anonymous campaign literature).

5.

B.

Speech that is Unprotected or Less Protected by the 1A 1. Incitement of Illegal Activity: (a) Government may punish speech if there is a substantial likelihood of imminent illegal activity and the speech is directed to causing imminent illegal activity (e.g. stand up with bat and say beat up professor). 2. Obscenity and Sexually-Oriented speech (a) The Test (Miller v. California) (i) Prurient Interest: The material must appeal to the prurient interest (e.g., inciting shameful or morbid interest in sex). This is a local-community standard. (ii) Patently Offensive: The material must be patently offensive under the law prohibiting obscenity. (iii) Lack Value: Taken as a whole, the material must lack serious redeeming artistic, literacy, political or scientific value. This is a national standard. (b) Zoning: Government may use zoning ordinances to regulate the location of adult bookstores and movie theaters. Erogenous zoning is permissible. Page | 43 of 153

(i) Example #1: Young v. American Movie Theaters - zoning ordinance that limited number of sex shops on each block upheld (ii) Example #2: City of Renton v. Playtime Theaters - zoning ordinance limited sex shops to a particular part of the city upheld (c) Kiddie Porn: Child pornography may be completely banned, even if not obscene. But, to be child pornography, children must be used in the production of the material. (i) Possession: Government may not punish private possession of obscene materials, but it may punish private possession of child pornography (d) Remedy: Government may seize the assets of businesses convicted of violating obscenity laws. (i) Ex: Alexander owned chain of adult bookstores; convicted of selling 7 obscene items. After this, federal government seized all of his property, burning all books. This was held to be constitutional. (e) Profane and Indecent Speech: (language) is generally protected (i) Example: Cohen v. California - jacket said fuck the draft. Supreme Court overturned his conviction of obscenity. To censor words is to censor ideas. (ii) Media Exception: over the broadcast media (uniquely intrusive into the home and accessible to children). Only applies only to free over-the-air media. Less latitude to regulate cable or the Internet. (iii) School Exception: Schools are responsible for teaching civilized discourse, and may punish indecent language. 3. Commercial Speech (a) Advertising for illegal activity, and false and deceptive ads are not protected by the 1A (b) True commercial speech that inherently risk deception may be prohibited (i) States may prevent professionals from advertising or practicing under a trade name (because bad professionals could change their name to fool the public). (ii) The government may prohibit attorney, in-person solicitation of clients for profit. Offer for free representation, or sending letters, are protected. (iii) The government may not prohibit accountants from in-person solicitation of clients for profit (c) Other commercial speech can be regulated if intermediate scrutiny is met. (d) Government regulation of commercial speech must be narrowly tailored; (i) But it doesnt need to be the least restrictive alternative. Defamation: libel and slander are not protected. (a) Public Official: (i) If the Plaintiff is a public official or running for public office, the Plaintiff can recover for defamation by proving Falsity of the statement and Actual Malice (e.g., D knew the statement was false, or acted with reckless disregard for the truth.) (ii) If the Plaintiff is a public figure same rule for public officials apply. Public Figures: those who thrust themselves into the limelight or who have access to the media to respond. (b) Private Figure: (i) If the Plaintiff is a private figure and the matter is of public concern, that sate may allow Plaintiff to recover for defamation by proving falsity of the statement and negligence by the Defendant. However, Plaintiff may recover presumed (automatic) or punitive damages only by showing actual malice. (ii) If Plaintiff is a private figure and the matter is not of public concern the Plaintiff can recover presumed or punitive damages without showing actual malice. 5. Privacy (a) Government may not create liability for the truthful reporting of information that was lawfully obtained from the government (e.g., rape victims name) (i) Government may limit its own dissemination of information to protect privacy. (ii) No 1A protection for government employees on the job in the scope of the performance of their duties. Page | 44 of 153

4.

(iii) Other government restrictions based on the content of speech must meet strict scrutiny. (b) Liability is not allowed if the media broadcasts of a tape of an illegally intercepted call if the media did not participate in the illegality and it involves a matter of public importance. (i) Ex: Two teachers were having phone call that was illegally reported. Tape was broadcast on local talk radio. Teachers sued and lost. C. Places that are Available for Speech (Freedom of Assembly) 1. Public Forums: government properties that the government is constitutionally required to make available for speech (e.g., parks, sidewalks) (a) Regulations must be subject matter and viewpoint neutral. It must be narrowly tailored to serve a significant government interest. (b) Regulations must be a time, place, or manner regulation that leaves open adequate alternative places for communication. (i) Ex: Ordinance upheld that said that no trucks with amplification devices may operate in residential areas at night. (c) Government regulation of public forums need not use the least restrictive alternative. (i) Ex: NYC adopted ordinance saying that concerts in city parks must use city sound engineers. Supreme Court upheld ordinance, even though less restrictive alternatives were available. (d) City officials cannot have discretion to set permit fees for public demonstrations. (i) Ex: County in Georgia had ordinance that required permit from mayor for parades. Mayor set fee up to $1000. To much danger of content based discrimination. This was held unconstitutional. Limited Public Forums (aka Designated Public Forum): government properties that the government could close to speech, but chooses to open to speech. (a) Even though the government could close to speech, the government chooses to open it. (b) As long as the government opens a place for speech, the rules are the same as for public forums. (i) Ex: School facilities - evenings and weekends, they are private spaces. But if the government chooses to open schools to community groups, they are public forums. Non-Public forums: government properties that the government constitutionally can and does close to speech. May regulate speech as long as the regulation is reasonable and viewpoint neutral. (a) Examples: (i) Military Bases: even parts usually opened to the public are non-public forums. (ii) Areas Outside Prisons and Jails: for the sake of security, these are non-public forums (iii) Advertising Space on City Buses: cities may limit to non-election related messages (iv) Sidewalks on post office property are nonpublic forums *** (v) Airports: are a non-public forum (solicitation of money can be prohibited; distribution of literature cannot be prohibited) Private Forum: There is no 1A right of access to private property for speech purposes. (a) Thus, theres no right to use shopping centers for speech.

2.

3.

4.

D.

Freedom of Association (fundamental right under the 1A) 1. Laws that prohibit or punish group membership must meet strict scrutiny. 2. For the Government to punish a person for membership in a group, the following must be met: (a) Active affiliation with the group; and (b) Knowledge of the groups illegal activities; and (c) Specific intent of furthering the groups illegal activities 3. Laws that require disclosure of membership lists, where such disclosure would chill association, must meet strict scrutiny. 4. Laws that prohibit a group from discriminating are constitutional unless they interfere with: (a) Intimate association, or (i) Example: small dinner party. Freedom of association allows exclusion of people in such an intimate setting. Page | 45 of 153

(b) Expressive activity. (i) Example: KKK can exclude African-Americans. Nazis can exclude Jews. Boy Scouts can exclude gay leaders. E. Freedom of Religion 1. Free Exercise Clause (a) Clause cant be used to challenge a neutral law of general applicability *** (i) Ex: Native Americans lost challenge to ban on peyote, because law was not motivated by desire to interfere with religion and was of general applicability to everyone in state. (ii) If law is motivated by desire to target one religion, it would have to meet strict scrutiny. (b) Government may not deny benefits to individuals who quit their jobs for religious reasons. (i) Ex: Woman quit job rather than work on Shabbus. State denied her unemployment benefits. She won state was making her choose between religion and income. 2. Establishment Clause: government can make no law which establishes a religion (a) The Lemon Test [SEX] (i) Secular Purpose: There must be a secular purpose for the law. If primary purpose is to advance religion, it is unconstitutional Ex: KY county adopted requirement that 10 Commandments be posted in County buildings. It was an unconstitutional advancement of religion. (ii) Effect: Effect must be neither to advance nor inhibit religion. Government must not symbolically endorse religion or a particular religion. Ex: Nativity scene by itself symbolic endorsement of Christianity. Can be a nativity scene as long as its accompanied by other religious and secular symbols Ex: Van Orden v. Perry- 10 Commandments at TX State Capital. (iii) Excess of Entanglement: There must not be excessive entanglement with religion. Government may generally not pay teachers salaries in parochial schools. If they did so, they would have to monitor what they were teaching. Excess of monitoring would be excess in entanglement. (b) Government cannot discriminate against religious speech or among religions unless strict scrutiny is met. (i) If it discriminated against religious speech in favor of secular speech, it would be content-based, and thus strict scrutiny (c) Schools: (i) Government-sponsored religious activity in public schools is unconstitutional. But religious student and community groups must have the same access to school facilities as non-religious groups. Ex: Clergy-delivered prayers at graduation ceremonies are not allowed. Ex: Student-delivered prayers at football games are not allowed. Ex: Silent prayer in schools is not allowed. (ii) The government may give assistance to parochial schools, so long as it is not used for religious instruction. The government may provide parents with vouchers that they may use in parochial schools.

Page | 46 of 153

Contracts I. Applicable Law A. MBE: Two sources of law on MBE: - common law & Article 2 of the UCC 1. UCC Article 2: applies only to a sale of goods (a) UCC Art 2 Does Not Apply (CL applies): (i) Rent a car (ii) Real Property (i.e. buy blackacre) (iii) Services (i.e. hire to repair car) (iv) Loans (b) UCC Art 2 Does Apply: (i) Buying a Car (ii) Applies to Things the are moveable (iii) Does not matter if parties are merchants or not merchants or what price is. (c) Mixed Goods and Services: If the subject matter is mixed between services & goods, look to see which is more valuable the goods or services (i.e. to sell car and to repair it). If the goods are more valuable, apply the UCC.

II. Contract Formation A. Formation, Defenses, Parol evidence, Parties, Conditions, Discharge, Performance, Breach: 1. Mnemonic: Fairway Drivers Putt for Par; Coffee Drinkers Pass the Bar. B. The Offer: manifestation of intent to be bound, created by words or conduct. Or an offer is a commitment communicated to an identified offeree containing definite and certain terms. 1. Test: (a) Must Have: Commitment (i) Determined by an objective test: Listening to the language and considering the apparent circumstances (i.e. was it a joke); look to would a reasonable person believe the speaker intended to enter into a contract. (ii) Special Rule for Advertisements: usually are not offers and merely invitation because there is no quantity term, and unlimited number could accept. Exception: ads which specify the quantity and who can accept (e.g., 1 dress, only $1. First come, first served.) (b) Must Have: Communicated to an Identified Offeree: (i) Communicated to Offeree Offers are effective on receipt. You cant have an acceptance until youve had an offer. (ii) Offeree is identified Only the person identified as the offeree can accept the offer. You have to know of offer to accept it. Rewards: Are offers made to the world. If person returns something listed in a reward notice, but never new about the reward, then no contract has been formed. Look for that the offeree knows about the offer. (c) Must Have: With Certain and Definite Terms. (i) Must describe the subject matter of the contract. Land contracts: offer must describe property and price Sale of Goods: offer must describe quantity and goods involved (you dont have to state the price). Exception of Requirement Contracts: UCC says as long as the seller offering to sell all her output, then quantity is not required to be a valid offer. Must have reasonable output and requirements in light of history. Example: X offers to buy all its requirements from seller for 6 yrs for $Y. (ii) Service Contracts: must describe duration and nature of services. Page | 47 of 153

Exception: if you dont give duration of services, it still a valid offer if it is a service contract terminable at will. (iii) Vague or Ambiguous Material Term: If the description of the property, price or quantity, type of goods, nature of the service or duration is vague or ambiguous, then there is no offer for lack of commitment. Example: I will sell you my car valid offer. I will sell you my car for a fair price is not an offer. Fair price is too ambiguous. No commitment. Valid offer may have vague term which is okay as long as it is not material (i.e. sell you my car for $5K and I might even wash it before delivery). C. Termination of Offers: 1. Irrevocable Offers: (a) UCC Art 2 Merchants Firm Offer Rule: (i) Merchant: A merchant is a person who regularly deals in goods of the kind sold or otherwise holds himself out as having knowledge or skill particular to the goods involves. (e.g. car rental company is not a merchant of cars for firm offer rule or merchant who is offering service and not sale). (ii) Firm Offer: Offer cant be revoked if made by a merchant, in writing and signed and states that it will be held open for some period or held open indefinitely. (iii) Result of Offer: If no time stated, will be held open for a reasonable time, if no consideration, no longer than 90 days. (e.g., question is did not offer lapse?) (b) Option Contract: (i) An option contracts is not freely revocable if there is (1) a promise to keep it open and (2) it is supported by consideration. (c) Reliance: (i) Offers that the offeree reasonably relies on are not freely revocable (i.e., general and sub-contractors). (d) Unilateral Contacts: (i) Unilateral Offers: acceptance is by complete performance. Unilateral contracts are not freely revocable for a reasonable time if: (1) Performance has begun, (2) The offeree has reasonably relied and the reliance was foreseeable. (3) When the contract is divisible, and some divisible part has been performed. (Series of separate offers of acceptance) Performance of each party is divided into two or more parts Numbers of parts on each side is the same Each part of the performance by one party has a corresponding part in the other partys performance. Example: Rewards can only be accepted by performance. (ii) Bilateral Offers: bilateral offers can be accepted by a return promise (either express or implied). Real Property: If offer to buy or sell land, or services, can only be accepted by express promise. Services: can only be accepted by express promise. (iii) Indifferent Offers: (Unclear) Offers that may be accepted by promise or beginning of performance are deemed bilateral contracts. 2. All other offers can be freely terminated prior to acceptance by revocation, rejection or operation of law. Page | 48 of 153

(a) Revocation: before acceptance, the offeror can revoke either expressly or by conduct. (i) Express Revocation: effective upon receipt of notice of revocation, and is anything that puts commitment in doubt. Receipt: possession or control Rewards: Rewards are revoked by public notice. (ii) Revocation by Conduct: occurs when the offeror does something absolutely inconsistent with maintaining the offer and the offeree receives notice from a reliable source. (b) Rejection: occurs when the offeree indicates an attempt to not accept. (i) Express Rejection: effective upon receipt and is anything that indicates a refusal to commit to the offer (counter-offer is enough). (ii) Rejection by Conduct or Lapse: when the offeree takes too long to accept. The offer lapses either after the specified time or within a reasonable time. (e.g., acceptance lapses and is a rejection if A waits 6 months to accept K for stock sale.) (c) By Operation of Law: (i) When an illegality prevents performance of a promise in an offer, (performance of K is illegal) (ii) Death or destruction of the offer subject matter, (iii) Death or incapacity of the offeror or the offeree. D. Acceptance: 1. Common law and UCC rules for Accepting a Bilateral Contract Offer (a) Express Acceptance Requirements: (i) Commitment: needs both language and circumstances. (ii) Communicated: Must be communicated by a proper method. Must be either the same one communicated in the offer or a reasonable means that is as quick & reliable. Different Method: If an offer clearly requires use of a particular method of acceptance, use of any other method is a counter offer. Mailbox Rule: an acceptance is effective upon dispatch (leaves offerees possession and control) , if (1) sent by proper method, (2) prepays delivery, and (3) properly addresses it, unless: The offer expressly says otherwise. If the offers suggested method is not used, even if another reasonable way; If the offer is pursuant to an option contract (i.e., option contracts on only valid as accepted on receipt, not dispatch). When offeree dispatches an acceptance, then a rejection. If the rejection is received first, and the offeror acts in reliance on it. When an offeree sends a rejection first, then an acceptance: the acceptance is effective upon receipt if it beats the rejection. If not, the acceptance is only a counter-offer. (b) Implied Acceptance: (i) Conduct: Acceptance by conduct is valid when: The offer states so. (Note: conduct is a communication to show acceptance vs. just performing the contract as in unilateral contracts). Unsolicited offer: acceptance of the offer benefits indicate assent (e.g. getting food in the mail, and eating it). (ii) Silence: Acceptance by silence is valid if: Offeree suggests it as a method; or Course of dealing creates a duty on the part of the offeree to object if he does not accept. (iii) Notice: Notice is required when accepting by performance if the offeree would not otherwise be aware of the beginning of performance. If too much time goes by without notice, the offer lapses. 2. UCC rules for Bilateral Contracts: (a) Acceptance by Performance: Page | 49 of 153

(i) If performance has begun, but completion of performance will take time, offeree must give notice to the offeror that performance has begun (e.g., shipment contract). If too much time goes by without notice, the offer lapses. (ii) Sending nonconforming goods is acceptance. Exception: seller clearly indicates goods are only sent as accommodation; rather than as acceptance. This is a counter-offer. 3. Common Law and UCC rules when Unilateral Contract Offer: (a) Acceptance: Acceptance requires complete performance of the act (e.g. rewards) (b) Notice: Notice of completion is required when (i) The offer says so or (ii) When completion would not otherwise come to the offerors attention within a reasonable time (e.g. the offeror is out of town) (c) Performance: The performance required in the offer judged by a reasonable person test (the offer in light of terms and apparent surrounding circumstances).

E. Counter-Offers (acceptance is really counter offer) 1. CL Mirror Image Rule: the acceptance must be the mirror image of the offer. Any change or addition, no matter how trivial, means it is a counter offer (and not an acceptance). 2. UCC Battle of the Forms: (a) A reply to an offer for sale of goods that changes or adds to the terms is an effective acceptance, unless: (i) Seller sends non-conforming goods as an accommodation. (ii) There is no expression of acceptance. (iii) Acceptance is expressly conditioned on agreement to the new or different terms. (b) Contract Terms: (i) All terms common to both. (ii) If not merchants: new or different terms are not part of the contract, unless the offeror agrees. (Offeror Wins) (iii) If merchants and new (additional) terms, terms in the acceptance automatically become part of the contract (Offeree Wins) unless: The offer stated to the contrary, The terms are a material alteration (parties would want to negotiate about it) (e.g. liability terms, remedies terms, etc). The offeror objects within a reasonable time. (iv) If merchants and different terms: Some states treat just like additional terms Some states knock out conflicting terms and use UCC gap fillers. Arizona: no decision on this yet. Sum up: (1) if totally different K then new K is now counter offer; (2) if new K doesnt change K, but materially modifies, the K#1 wins; (3) if new K doesnt change K and doesnt materially modify, then K#2 wins. F. Consideration 1. Arizona: If K is in writing, there is a rebuttable presumption that it is supported by consideration. 2. Rule: A promise must be supported by consideration or a consideration substitute to be enforceable. (a) Requirements: (i) Bargained for exchange; Not BFE: Gifts (no motive to give a gift or bargaining to get/give the gift) Past Work: A promise to pay for past work or something already given is unenforceable - unless, performed with an expectation of payment. Exception: if debt is discharged by bankruptcy or SOL, and there is a subsequent promise to pay debt in writing, debt is enforceable to extent it is revived by Page | 50 of 153

new promise. (Therefore, they now have a moral obligation to pay) Arizona: a promise to pay a debt barred by the SOL is enforceable if in writing and signed by the debtor.

(ii) Legal detriment to promise; Meaning of Detriment: promise asks promisee not to do something it either had a right to do or has reasonable and good faith belief it has a right to do and is not otherwise bound to do. Preexisting Duty Rule: Promise to perform something one is already obligated to do is not consideration (e.g. I will get you $4K if you breath) If there is a good faith dispute over pre-existing duties, any settlement within the range of the dispute is enforceable. If preexisting duties are discharged. PED rule is inapplicable. (iii) If consideration is a return promise, it cant be illusory. If a promisor has unfettered or unlimited discretion to perform, the promise is illusory. Promises subject to a condition of satisfaction are not illusory (e.g., you only have to pay if you are 100% satisfied). Not illusory if satisfaction is a matter of taste and buyer acts in good faith - subjective (e.g. painting,) Not illusory if not matter of taste and is reasonably satisfactory (e.g. painting house) objective standard. (b) Consideration Substitutes (i) UCC Merchants Firm Offer Rule: if merchant puts an offer in writing, signs it and promises it will be kept open, it is irrevocable for up to 90 days even if no consideration is given for the promise to keep the offer open. ** Modifications to an existing contract need no consideration. Promissory Estoppel: A promise is enforceable when it induces detrimental, reasonable and foreseeable reliance. (ii) CL Modifications under seal are not a consideration substitute. Promissory Estoppel: A promise is enforceable when it induces detrimental, reasonable and foreseeable reliance. III. Defenses A. Overview 1. [I DIM SUM] Incapacity, Duress, Illegality, Mistake, Statute of Frauds, Unconscionability, Misrepresentation. 2. Void vs. Voidable: Void = unenforceable; Voidable = one party has defense and can choose to assert it.

B. Statute of Frauds (Will Make Contract Voidable) 1. Common Law SOF: a writing that identifies both parties, the subject matter, supported by consideration and signed by the party by charged. Contracts covered by CL SOF: (a) Marriage Contracts: SOF applies where promise of marriage is part of the consideration of contract (b) Suretyship Contracts: applies to collateral promise not made for a personal benefit (i) Collateral: Promisor puts himself second in line only in the event the primary defaults (ii) Primary purpose cannot be for personal benefit (c) Real Property: Contracts with an interest in land lasting more than one (1) year. (i) Contract has to be conveying interest in land. Not just a connection in real estate. (i.e., not hiring broker to sell land must convey.) Arizona: however, in Arizona, hiring brokers is covered by SOF. (ii) Equal Dignities: authorizing a person to sign a contract subject to SOF, the authorization must have equal dignity (i.e. it must also be in writing). Page | 51 of 153

(d) Service Contracts: SOF will be applied if at the date of formation there was no logical possibility to complete performance within one year from that date. (i) i.e. test is not will it probably last more than a year, the test is that (at the date of signing) it is not logically possible Example: Signing contract for 2 years CL SOF applies Big job likely to take more than a year SOF does not apply 2.

UCC SOF: a writing describing the goods and quantity, signed by a party to be charged.

(a) A contract for the sale of goods for $500 or more must satisfy SOF. (i) Except if: Specially Manufactured Goods: Contract for the sale of specially manufactured goods that are not readily resalable. Once seller has started to manufacture or purchase goods for buyer oral contract is enforceable. Merchant Confirmatory Memo: In contract between merchants - where one orders orally, and the other gives written confirmation (signed and states the quantity) of that oral order, and the ordering merchant doesnt object to confirmation within 10 days, the SOF is satisfied for both. Judicial Admission: admission in court or any judicial context that a contract was made is sufficient. (b) Evidence Necessary to Satisfy SOF: (i) Writing (CL) Writing signed by the party to be charged (D) Identifies the parties Identifies the subject matter The consideration given by both sides Other important terms and conditions Signed by the party to be charge describing (1) goods (price) and (2) quantity.

(ii) Part Performance of Land of Sales Contract & Performance of Service Land and sales contracts can be enforced if there is already performance to the extent of the performance completed. If there is performance, some oral contracts can be enforced to the extent of the performance. Land Sale: Must be more than partial payment, the buyer either takes possession of the land or improves the land. Service Contract: must be full performance of service contract to use SOF defense. Arizona: a party can be estopped from calling SOF defense where other party relied on oral contract. C. Incapacity (Contract is Voidable): 1. Can Affirm: If the incapacitated party regains capacity, that person can affirm. 2. Who Lacks Capacity: (a) People under 18; (i) Doesnt matter if other party doesnt know contracting party is under 18 for minor to raise defense (objective belief doesnt matter). (b) Mental Incompetents: (i) Cant understand the contracts the nature or significance of contract. Effect of Defense: If adjudicated incompetent, contract is void; if not adjudicated, only voidable if other side knew or should have known of problem. (c) Intoxicated Persons. (i) Cant understand nature or significance of contract. Effect of Defense: Voidable if other side knew or should have known. Can Affirm: Once person can sober up that person can affirm. D. Misconduct Defenses (Contract is Void/Voidable) 1. Illegality (a) Effect of Defense: Page | 52 of 153

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(i) Contract is void if the subject matter is illegal (e.g. a contract for murder). (ii) If the purpose, but not the subject matter is not illegal, the contract is voidable at the option of the innocent party (e.g. contract to rent plane for the purpose of bombing law school). Misrepresentation or Fraud (a) Material misrepresentation by a party allows the innocent party to rescind the contract if the innocent party justifiably relies upon the material misrepresentation. A representation is material if it would induce reasonable reliance or if the maker knew it would cause reliance. (b) Effect of Defense: (i) Fraud of Execution: If there is fraud in the execution, it is void (e.g. tricked into signing something you dont know is a contract). (ii) Mis or Fraud in the Inducement: Misrepresentation or fraud in the inducement makes contract voidable (e.g., know you making contract but youre told something false about the subject matter). (c) Misrepresentation: negligent statement that was reasonably relied on. This is a defense if it goes to a material factor and there is reasonable reliance. (d) Fraud: intentional misstatement that is actually relied on. This is a defense if it goes to a material factor and there is actual reliance on the fraudulent statement. Duress: (a) Personal duress: threat of physical harm makes the contract voidable (e.g. make him an offer he cant refuse) (b) Economic duress: party is engaged in wrongful conduct that created or made worse a persons economic position makes the contract voidable (e.g. cattle rancher loses income because thugs rustled the cattle thus forcing him to seek a loan).

E. Unconscionability: (Contract is Voidable) 1. Defense: (a) CL & UCC: requires procedural and substantive unconscionability. (b) Arizona: Requires only substantive unconscionability. 2. Procedural unconscionability: unfairness in the bargaining process (e.g. unreadable fine print or complex legalese). 3. Substantive unconscionability: contract is unreasonably one-sided or contrary to public policy. (a) Was there a one-sided term? (i) Does it protect a legitimate interest? (ii) Is it a reasonable way to protect that interest or does it go beyond what is necessary? Reasonableness is measured at the time of formation. (b) Ex: (i) Waiver: a waiver of personal injury damages is contract for consumer goods is unconscionable ( you do not need to go through above analysis) (ii) Arizona: A hold harmless clause in a construction contract that proves a contractor is not responsible for its own negligence is unconscionable. F. Mistake and Ambiguity: 1. Mutual Mistake of Material Fact (Contract if Voidable) (a) When both (2) parties are mistaken as to a matter that is central to the contract. Contract is voidable. (i) No defense if party assumed the risk (e.g. had doubt, but proceeded with contract anyways). 2. Unilateral Mistake of a Material Fact: (a) When one (1) party is mistaken to an essential matter of the contract. Only applies when the other party knew or should have known of the mistake. (i) No defense if mistaken party assumed the risk. (ii) Value: A mistake as to value typically not a defense as is it usually an assumption of risk. However, if relied on expert and mistaken party is unaware of risk mistake of value may be defense. 3. Ambiguity:

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(a) Where the contract describes its subject reasonably susceptible to more than one meaning, the contract is unenforceable unless: (i) both parties subjectively had the same meaning in mind (e.g. both parties had wrong carrier in mind), or (ii) one party should have known the other party had a specific meaning in mind. IV. Parol Evidence: A. Purpose: Purpose is to promote ability of parties to rely on written contracts by excluding evidence that the parties agreed to something other than what appears in the written contact. B. Final Integrated Agreement: Where there is a writing that is a final expression of the terms of a contract, evidence of conflicting terms in a prior or contemporaneous oral or written agreement is inadmissible. 1. i.e., parol evidence is admissible to add a term that did not make it to the contract, but not to contradict. 2. Not Modification: Parol evidence applies to discussions prior to or contemporaneous with the contract, and does not apply to modifications made pursuant to subsequent discussions (anything that happens subsequent to contract formation is not precluded from admission based on the parol evidence). C. Completely Integrated Agreement: a writing that is both a final and complete expression of the terms of a contract cannot be changed or added to by any prior or contemporaneous oral or written agreement. 1. Look for Merger Clause 2. If writing does not say completely integrated: ask if parties would have intended for this to be integrated, would they reasonably included it in the writing? D. Admissible for Defense: Parol evidence is always admissible to show fraud, duress or mistake. E. Admissible for Interpretation:: 1. UCC and Arizona: Parol evidence is generally admissible to interpret any contract language which is reasonably susceptible (e.g. LA = Los Angeles or Louisiana). 2. CL: parol evidence is generally inadmissible to interpret when the language in the written is not ambiguous on its face and there is a plain meaning. 3. Course of Dealing, Course of Performance, and Trade Usage is admissible to interpret contacts, and is not parol evidence. F. Inapplicable to Collateral Agreements: Parol evidence rule does not exclude evidence of other collateral agreements between the same parties, but on a different subject. V. Third Party Rights A. General Principles or 3rd Party Rights (i.e., rights and obligations of those not parties to the contract) 1. 3P rights are derivative from the original parties. 2. 3P rights are created at formation (Beneficiary), after its creation, or at assignment. B. 3P Beneficiary Contract 1. 3P BK Exists: where 3P is the intended party beneficiary of a promise, and not just incidentally benefited. Intent can be shown by: (a) 3P is identified in the promise (b) K calls for rendering of performance by promisor to the identified 3P (c) There is some relationship between promisee and the 3P that indicates that the promisee intended for 3P to benefit. 2. Creditors, Donees and BKs (a) 3P is Creditor: is one whom promisee already owns an obligation and promisee negotiates for the promise to satisfy the existing underlying obligation. (i) Arizona: imposes high burden of proof to establish creditor beneficiary... there must be specific statement in contract recognizing the creditor relationship. (b) 3P is Donee: gets performance as a gift. (c) Difference: difference between the two is that if you are a creditor you can sue both promisor and promisee (you only can collect one judgment), while if you are a donee, then you only get to sue the promisor. 3. Substantive Rules for BKs: (a) 3P or promisee can enforce a 3P contract against promisor. (b) A 3P can enforce the promise in the form it was in when 3Ps rights vested. Page | 54 of 153

(i) A beneficiaries right to enforce vests when they learn of the promise and: Assents to it; Changes there position in reliance on it, or Sues on it. C. Assignments 1. Terminology: (a) Obligor: someone who is obligated to do something under the K (e.g. buyer) (b) Assignor: party to K whose assigning a right it received in the K (e.g. seller) (c) Assignee: not a party to K but receives right through K and is entitled to performance by obligor (e.g. 3P). (d) Two types: gratuitous assignments (paid nothing for assignment of right) and assignments for consideration.

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Formation: (a) Occurs when a party to a contract that has already been formed unilaterally assigns their rights to a 3P. (b) In order for an assignment to be valid (1) the right must be assignable, (2) must be properly assigned. (i) Right is not assignable if: Contract Prohibits Assignment. Common law: can assign, but causes breach. UCC: can assign. The Law Prohibits the Assignment. Contracts Require Performance of a Personal Service. Assignment Changes the Nature or Character of Obligors Performance (e.g., makes the obligors performance must more difficult) Requirements Contracts: generally requirements contracts are not assignable. However, under UCC, may be assignable if done in good faith. The question to ask is, does the completion of the requirements contracts change if assigned? (ii) Proper Assignment: Right assigned must be properly described. The assignor must use words of present transfer (e.g., I hereby assign the right, not I will assign the right). Assignees Rights: (a) Assignee v. Obligor (i) Subject to any defense that the K obligor had prior to receiving notice of assignment (e.g. obligor cannot defend by agreement with assignor which was made after he received notice of assignee). (b) Assignee v. Assignor: (i) The assignee gets from assignor implied warranties of assignment, the breach of which the assignee the right to sue. . Assignments for Consideration: Assignor impliedly warrants to do nothing after the assignment to defeat the assigned right. Assignor impliedly warrants that K was validly formed (aka defenses to the assigned right) unless notice given at the time of assignment. (c) Assignee can assign to other assignees. (i) Subsequent gratuitous assignments take priority over prior gratuitous assignments unless: The first was in writing; The assignor transferred some indicia of ownership (e.g. deed) The prior assignee foreseeably, detrimentally and reasonably, relied on the assignment. (ii) Assignments for consideration always take priority over gratuitous assignments. (iii) If multiple assignments for consideration, first in time has priority, unless a subsequent assignee who does not know of the prior assignment: Page | 55 of 153

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Exam Tip:

Gets performance; Gets a judgment against obligor; Enters into a novation; Receives indicia of ownership or the rights assigned (e.g., deed) (1) eliminate invalid assignments, (2) see if assignment is for consideration or gratuitous (3) if only gratuitous the last one wins unless exception (4) if only consideration the first one wins unless exception (5) if both, eliminate gratuitous

D. Delegation of Duties: 1. Limits on Power to Delegate: (a) If the contract prohibits delegation; (b) The law prohibits delegation; (c) If the duty involves the performance of personal services. (d) If the delegation would substantially change the nature and character of the performance involved. (i) Output Contracts: UCC implies that the output will be consistent with sellers history or any stated estimate made at time of contract (e.g. if delegator delegates K to delegate, obligee will get same product as promised). 2. If Valid, The Rights and Obligations of the Parties: (a) The obligee must accept the performance of the delegate. (b) The delegator remains a surety for the performance of the delegate. (c) If the delegation was gratuitous, the obligee cannot require the delegate to perform. (d) If the delegation was supported by consideration, they can sue the delegate for performance. VI. Conditions: A condition is an event that must occur or be excused before the promisor has a duty to perform (e.g. buyer promises to buy house on condition that an inspection shows it is free from defects). A. Types of Conditions: 1. Express Condition: condition on the face of the contract. (a) Language: subject to, provided that, if, in the event that, unless, on the condition that (b) Approach conditions one promise at a time (whether both parties promise, or only one party promises) 2. Constructive Condition: condition implied by law into a contract regarding the circumstances surrounding the sequence and duration of the performance. (i.e. Who Has to Complete First?) (a) Longer Goes First: Where one performance will take longer than the other, and the parties do not state the order of performance, the rendering of the longer performance is a constructive condition to the other partys promise (i) e.g. homeowner promises to pay $5K and the painter promises to paint painting takes longer then paying, therefore painter has to go first, then homeowner hast to pay. (ii) Goes in Agreed Order: Where the parties state the order of performance, imply a consistent constructive condition. (i.e., if they say who does what first, you have to go in that order regardless of what takes longer). (b) Takes the Same Time: Where both performances will take the same amount of time, the tender of each partys performance is constructive condition on the other partys promise (i.e., gotta do it at the same time). (i) Goes in Agreed Order: Where performances will take the same amount of time, but the parties state the order of performance, imply a consistent constructive condition. B. Excuse of Conditions: if there is a condition on the duty of a party to perform, that partys duty does not arise, and it cannot be guilty of breach for failure to perform, unless the condition is satisfied or excused (i.e. if P1 doesnt follow through with their promise, P2 is excused from performing their subsequent duty, and P2 can sue P1 for breach).

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Failure to cooperate or prevention: if a party has some control over whether a condition on whether their duty to perform will be fulfilled, the condition is excused if the party doesnt try to fulfill the condition, or prevents its fulfillment. (a) e.g. buyer promises to buy house if can get a loan not more than 8%. Buyer never applied to get a loan. Buyer cannot defend suit by seller for breach on the grounds that seller failed to perform the condition because buyer never cooperated. Anticipatory Repudiation: when a party unequivocally repudiates before performance is due, conditions on this partys obligation to perform are excused and there is a breach. (a) Repudiation before any party performs allows innocent party to sue immediately. (b) Repudiation after performance by innocent party, repudiator cannot be sued immediately (must give party a chance to perform). (c) If no clear repudiation, but doubt exists, innocent party can demand written assurances within a reasonable time. Voluntary Disablement: when a party engages in conduct that makes the other party unable to perform, the conditions on their performance are excused and there is breach. (a) Innocent party can sue immediately. Estoppel: conditions are excused by estoppel where: (a) the party whose duty is conditioned says, before the condition was to be fulfilled, that it will perform even if the condition is not fulfilled AND (b) the other party changes position in reliance on this statement. Waiver: condition is excused by waiver when after the condition was to have been fulfilled but was not, the party who performance was conditioned, knowing of the conditions failure, states it will perform.

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C. Satisfaction of Conditions (Performance and Breach): 1. 2. Complete Satisfaction: nothing is left to be done. (a) This is test for express conditions. Substantial Satisfaction: condition is substantially satisfied. (a) This is test for constructive conditions. (b) Still in breach because only substantially complied, however, get credit for what you have done. UCC Perfect Tender Rule: contract calling for a single delivery of goods requires perfect tender (i.e., if seller doesnt deliver complete single delivery buyer doesnt have to pay and can send back). (a) Exception: if you give notice that you can cure, then buyer has to pay. (b) Installment Contracts: substantial satisfaction; tender rule only applies to single deliveries. Doctrine of Divisibility: if the contract is divisible, conditions can be satisfied within the divisible parts. (a) In breach, party is obligated to pay for divisible acts completed.

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VII. Discharge of Duty: If all conditions have been excused or satisfied, a promisors duty to perform is absolute and must perform to avoid breach, unless the duty has been discharged. [FAN MIMIC] Watch for SOL & SOF issues! A. Frustration of Purpose: (Discharge by Operation of Law) 1. Duty is discharged when (a) the partys purpose for the contract is destroyed (b) by some unforeseeable event, and (c) the other party knew of this purpose at the time of formation. B. Accord and Satisfaction: (Discharge by Agreement) 1. Accord is a new agreement to clarify each partys duties. 2. Satisfaction is the performance of accord. 3. The duties are discharged if & when satisfaction occurs. If satisfaction does not occur, can sue for breach under old terms (e.g., satisfaction can occur by cashing of a check). 4. Accord and satisfaction requires consideration for new contract.

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C. Novation: (Discharge by Agreement) 1. Where all the parties to an existing contract agree to extinguish the rights and duties of one party and substitute another party in their place. 2. Novation vs. Delegation: novation is not a unilateral decision like assignment/delegation. In delegations, they remain liable; whereas novation you are free of the duty. D. Modification: (Discharge by Agreement) 1. Modifications discharge the duties, so long as they are enforceable. (a) CL: modifications must be supported by consideration. (b) UCC modifications are enforceable without consideration. E. Impossibility: (Discharge by Operation of Law) 1. A duty is discharged when, after formation, something happens to make it impossible for the party to perform. (a) Examples: (i) death, (ii) permanent physical incapacity, (iii) duty becomes illegal after formation, (iv) subject of contract is destroyed 2. UCC Special Rules: destruction of identified goods (goods that the seller has already shipped, marked, or otherwise identified as pertaining to the contract in question) discharges the buyer for impossibility, if risk of loss didnt already pass to the buyer. (a) Risk of Loss/Destruction Transfer: (i) Merchant: If seller is a merchant, risk of loss transfers when buyer physically receives the goods. (ii) Non-Merchant: If seller is a non-merchant, risk of loss passes when seller gives notice to buyer of availability and makes the goods available to the buyer for a reasonable period of time. (iii) Shipper is Common Carrier: If a common carrier (intermediary shipping company) shipment contract If contract includes shipping to place other than where seller is located (FOB), seller (merchant/non-merchant) has risk of loss until delivery until tender. Any other kind (FAS, CIF), risk of loss passes when seller puts goods in the hands of the carrier.

F. Mutual Rescission: (Discharge by Agreement) 1. If neither party has performed, a mutual agreement to rescind can discharge everyones duties (i.e. if both parties rescind before work has been performed by either party that is consideration; they are each giving something up). G. Impracticability: (Discharge by Operation of Law) 1. Event occurs that was unforeseeable at formation that now makes it unreasonably difficult or expensive to perform. (a) This discharge (or any discharge applies) the parties make a new contract for same subject, and there is no argument for pre-existing duty defense. H. Condition Subsequent: (Discharge by Operation of Law) 1. Anything not mentioned above that change the duties of the parties wipes out the duty of the party to perform (e.g., insurance company had duty to pay for stolen jewels, but jewels are recovered prior to payment). VIII. Remedies for Breach: A. Common Law Remedies: 1. Expectancy Damages: non-breacher can recover the difference between net value of what was promised and the net value of what was received (if anything) from the breached. Recoverable except the extent of what could have been reasonably mitigated.

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2. 3. 4.

Consequential Damages: In addition to expectancy damages, non-breacher can recover losses that
were reasonably foreseeable at formation caused by the breach.

Incidental Damages: non-breacher party may recover reasonable costs of mitigating its damages. Quasi-Contractual (aka Unjust Enrichment): when a promise is unenforceable, but one party
receives a benefit from the other, a party bestowing the benefit may recover the reasonable value of the benefit (e.g. person who lacks capacity receives benefit can be sued for reasonable value of the benefit they received even though cant be bound to contract).

5.

Liquidated Damages: Enforceable, if (1) at the time of formation breach damages were hard to

estimate and (2) the amount specified in the clause was a reasonable forecast of actual damages (if either prong fails, then it is unenforceable; goal is for compensation not punishment). 6. inadequate because uniqueness of the subject and if the courts can reasonably enforce. (a) Must be Valid Contract (b) All conditions must have been satisfied or excused (c) The Legal Remedy must be Inadequate (i) Personal Service Contracts: No specific performance on personal service contract (it would be like slavery) (ii) Covenants Not to Compete: can enforce this only if it is reasonably limited in its scope. (d) Enforcement Must be Feasible (i) How? Holding D in contempt (in jail) if he defies the court order to perform on the contract. D must be in the jurisdiction of the court. Real Estate can be conveyed if D does not do it. Real estate must be in jurisdiction of the court. (e) No Equitable Defenses (can only prevent P from getting equitable remedy; does not prevent P from getting damages). (i) Laches: when there is unexcused delay in bringing a suit that prejudices defendant. SOL does not effect the laches analysis. (ii) Unclean Hands: where there is wrongful conduct by P connected to the inducement or performance of contract. B. UCC Remedies: 1. Sellers Warranties: (a) Types: (i) Express Warranties: made whenever seller makes a promise about the goods, gives a description or factual affirmation about the goods or gives a sample of the goods. Distinguish fact from opinions about the goods (puffing this is a great car!) (ii) Implied Warranties: Warranty of Title: Seller always warrants good title. Warranty of Merchantability: warrants that foods are fit for its ordinary use and is safe. Only given by merchants. Warranty of Fitness: fit for a specific purpose. Only given by seller who knows buyer wants to use for a specific purpose and buyer relies on sellers skill to select the goods. Seller warrants that goods are fit for the specific purpose. (b) Limitations on Warranties: (i) Disclaimer: completely eliminates warranties. Express warranties cannot be disclaimed. Implied warranties can be disclaimed. Warranty of Merchantability and Fitness must be in writing and must be obvious (e.g. in bold) (ii) Limits on Remedies for Breach: warranty survives but the remedies available for breach are reduced. Limitations fail if they (1) fail for essential purpose or (2) are unconscionable (e.g. cannot waive right to sue for personal injuries). Page | 59 of 153

Specific Performance (Equitable Remedy): Only available when money damages would be

2.

Buyers Remedies for Sellers Breach: (a) Status Quo Remedies: designed to get the goods back into the sellers control after the seller ship, but breaches. (i) Rejection: in a contract for a single delivery, buyer can reject for any non-conformity. (aka Perfect Tender Rule) (ii) Revocation of Acceptance: when buyer can revoke acceptance for a substantial defect or non-conformity that was not discovered at the time of acceptance or that the seller said would be cured. Buyer must give reasonable notice, and wait for instructions from seller. (b) Other Remedies: (i) Damages: Keeps: If buyer keeps non-conforming goods, and can sue for damages relating to the diminished value of the goods. Covers: If seller fails to deliver or buyer rejects or revokes, buyer can cover and get the difference between the cover price and the contract price. If buyer doesnt cover, damages are the difference between the market price when buyer knew of breach and the market price. (ii) Consequential and Incidental Damages (see CL above) (iii) Specific Performance (see above) (e.g. if the goods are in short supply, the are considered unique)

3.

Sellers Remedies for Buyers Breach: (a) Status Quo Remedies: (i) Right to Withhold the Goods: if still in sellers possession, may withhold delivery, mitigate and sue for damages. (ii) Right to Stop in Transit and Recover Shipped Goods: if the buyer breaches after the seller ships goods, seller can stop and recover shipment if buyer is insolvent. If the buyer is solvent, seller can only stop large shipments (i.e., car loads). (b) Other Remedies: (i) If seller still has the goods, he can get difference between the contract price and the substitute sale price. Seller must give notice to buyer unless perishable goods or will decline in value quickly. (ii) Seller can recover the difference between the contract price and the market price at the time and place delivery was to be made. (iii) Seller can recover contract price if the goods are not resalable. (iv) Lost Volume: Remedies for lost volume seller (e.g. Sears) damages are calculated by considering sellers lost profits. (v) Seller can get incidental damages under the same rules as common law. (vi) Open Price Terms: too indefinite under CL, but not UCC For goods, UCC will fill in no price with reasonable price For other sales, too indefinite for CL

Essays
Applicable Law:

UCC Art. 2 applies to transactions involving the sale of goods. Goods are things that are moveable at the time they are identified to the contract. X is a moveable good, thus the contract between A and B will be governed by the UCC. There are special provisions in the UCC to deal with transactions where the seller or both parties are merchants. A merchant is one who regularly deals in goods of the kind sold. A and B deal in X, and are both merchants under Art. 2. Page | 60 of 153

CL or UCC: Where a contract involves goods and services, the court will look to what aspect of the contract predominates to determine which law to apply. CL: Common law governs contracts for services or interests in land. Here the contract is for X, and therefore common law will apply. Contract Formation: for a contract to be enforceable, there must be an offer, acceptance and consideration. Offer: An offer is a commitment communicated to an identified offeree containing definite terms. A did xyz, communicated a commitment to contract by xyz. Therefore there was a valid offer. Acceptance: Acceptance requires assent to the offer communicated to the offeree. CL: at common law, the acceptance has to be a mirror image of the offer, otherwise it will be considered a mere counter-offer. An offeree may accept an offer up until the offer is revoked. UCC: new or different terms are not part of the contract, unless the offeror agrees. UCC Merchants: when both parties to the contract are merchants, addition of different terms included in an acceptance or confirmation letter will be included in the contract unless (1) they materially alter the original contract (2) the offer expressly limits acceptance to the terms of the offer, or (3) the offeror has already objected to the particular terms or does so within a reasonable time after notice of them. Consideration: Consideration is bargained for legal exchange. Statute of Frauds CL: A contract that by its terms cannot be performed within one year must be in writing and signed by the party to be charged. UCC: The UCC requires that contracts for sale of goods for $500 or more be in writing signed by the party to be charged. UCC Merchants: In contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of his understanding, that is sufficient under the SOF to bind the sender, it will also bind the recipient if (1) he has reason to know of the confirmations contents, (2) he does not object to it within 10 days of receipt. Warranties and Disclaimer: Implied Warranties: There are implied warranties in every contract. The implied warranties are relevant are that: 1. the goods will pass without objection in trade under the contract description and 2. are fit for the ordinary purpose for which the good is intended and 3. that they are fit for a particular purpose which arises whenever a seller has reason to know the particular purpose for which the goods are to be used and that the buying is relying upon the sellers skill and judgment to select suitable goods. An implied warranty of fitness for a particular purpose may be found when a sample has been sent out to illustrate what the product will do or looks like. Express Warranties: An express warranty may be created by sending a sample if it becomes the basis of the bargain. To be considered the basis of the bargain, it must occur when the buyer could have relied upon it when she entered into the contract and it is not necessary that the seller intended the sample to create a warranty. Disclaimer: Page | 61 of 153

To disclaim the warranty of merchantability, the disclaimer must specifically mention merchantability. Not specific wording is required to disclaim the warranty of fitness. A disclaimer must be conspicuous to a reasonable person (i.e. it must be in writing and obvious). Disclaimer of express warranties will be enforced to the extent they are reasonable.

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Criminal Law I. Introduction A. Jurisdiction: Jurisdiction is where state where conduct or result occurred (e.g. in one state, shoots gun killing person in another state; there is jurisdiction in both states). 1. Omission: Crimes of omission have jurisdiction where they should have occurred. B. Merger: Generally, there is no merger of crimes. 1. Exceptions: (1) Solicitation and (2) Attempt merge into the substantive offense (a) Arizona: Attempt is a separate crime in Arizona; you can be charged with both, but as a result of double jeopardy principles, you can only be convicted of one. (b) Conspiracy Exception: Conspiracy does not merge with the substantive offense. Thus, if you have completed that crime, you can be convicted of doing the crime and of conspiracy. 2. Never merge any crimes with different victims. Elements of a Crime: (1) Act, or (2) Omission of an Act, and (2) Mental State A. Act: any voluntary bodily movement 1. Exceptions: (a) Conduct that is not the product of your own volition (e.g. being pushed). (b) A reflexive or convulsive act (e.g. epileptic seizure). (c) An act performed while unconscious or asleep (e.g. sleep walking, but not falling asleep at the wheel). B. Omissions to Act: Failure to act will constitute a crime only where there has been a legal duty to act and it is reasonably possible to perform the act. 1. A legal duty to act arises: (a) By statute (e.g. tax returns) (b) By contract (e.g. a lifeguard or nurse) (c) Relationship between parties (e.g. special relationship) (d) Voluntarily assuming a duty to care and failing to do so adequately (e.g. beginning to save someone then stopping) (e) Conduct created the peril. Mental State: 1. Transfer Intent (like in torts) okay, for even specific intent crimes (e.g. murder). 2. MBE: (1) general intent, (2) specific intent, (3) malice, (4) strict liability

II.

C.

Specific v. General Intent: Distinction only exists in common law; MPC does not distinguish Description Defenses Offenses Specific Intent Intent to engage in proscribed conduct

General Awareness of acting in proscribed manner

Malice Reckless disregard of an known risk

Strict Liability Conscious communion of proscribed act. no intent is required; any defense that negates intention cannot be a defense here Statutory Rape Selling Liquor to Minors Bigamy

voluntary intoxication, any mistake of fact Kidnapping Battery False Imprisonment Rape

(All theft, all inchoate offenses) 1st Degree Murder Assault (not battery) Solicitation Attempt Conspiracy Larceny Robbery Burglary Forgery False pretenses Embezzlement 3.

2nd degree Murder Arson

Default for all crimes unless they are strict liability default area

This is the default when the crime is in the administrative, regulatory or morality area and the statute does not have adverbs (i.e., knowing or recklessly.)

Arizona: does not use or refer to CL intent terms. Mental state in Arizona:
(a) (Purposefully) Intentionally: must have a conscience desire Page | 63 of 153

(b) Knowingly: must have believed or been aware (aka willfully) (c) Recklessly: must have been aware and disregarded a substantial and unjustifiable risk (d) Criminal Negligence: must have failed to perceive a substantial and unjustifiable risk III. Accomplice Liability: A. Elements: 1. Intent to promote or facilitate the commission of an offense by the other. 2. Performing an act in furtherance of the offense. (a) Only when the activity is the crime a person was in on or a part of that crime; it is not (i) mere presence, (ii) consent to the crime, or (iii) Failure to report (e.g. not accomplice just for failing to call the police). B. C. D. E. IV. Accessory After the Fact: D would be liable as an accessory after the fact if she assisted him to avoid apprehension knowing that he had committed a felony. Liability: a person is responsible for the crime itself and all foreseeable crimes. 1. The fact that the principal is not convicted or cannot be convicted is not defense. Exception: not an offense if committed by a police officer acting in official capacity. Arizona: there is no accessory before the fact or after or aiding and abetting crimes.

Inchoate (Incomplete) Offenses A. Solicitation: person, with intent to promote or facilitate the commission of that crime: solicits, commands, aids, counsels, agrees or attempts to aids another in planning or committing the crime or provides the means or opportunity to another to commit the crime. 1. Cannot be too broad, must be somewhat specific (e.g. take care of them not specific enough). 2. This crime is complete when you ask them. 3. Note: under both MPC and AZ, it is not necessary that the person solicited agreed to commit the crime. (a) If the person agrees to commit the crime, then is becomes a conspiracy and the solicitation merges and the only crime left when they agree to do it is the conspiracies. 4. Arizona Defense: must be a complete and voluntary renunciation by notifying the person solicited and notifying the law enforcement or making reasonable efforts to prevent the commission of the crime. Conspiracy: (Specific Intent) 1. Requirements: (a) An agreement between two parties (two guilty minds; plurality -meeting of the minds); and (b) Intent to enter into an agreement and (c) Intent to commit an unlawful objective 2. Sometimes Over Act (a) MBE Majority Overt Act: A majority of courts require an agreement plus some over act in furtherance. If in overt act jurisdiction, any little act will do be overt. (b) MBE Minority No Overt Act: A minority of courts rule ground liability for conspiracy with the agreement itself only. (c) Arizona Overt Act: Arizona has the same CL overt act requirement, however, no overt act is required if the conspiracy was for (i) felony upon a person, (ii) first degree burglary, or (iii) arson of an occupied structure. 3. 4. 5. 6. Conspiracy does not merge with the substantive offense (e.g. conspiracy to rob and robbery) Each conspirator is liable for all the crimes of co-conspirators if those crimes were committed in furtherance of the conspiracy and were foreseeable. The agreement does not have to be expressed (e.g. knod). (a) Exception: Husband and wife cannot conspire implicitly. Defenses to Conspiracy: (a) Impossibility: is not defense to conspiracy. Page | 64 of 153

B.

(b) Withdrawal: even when adequate, can never withdraw the defendant from liability for the conspiracy itself. It is a defense only for the liability of co-conspirators subsequent crimes. (c) Acquittal: (i) MBE: the acquittal of all person with whom a defendant is alleged to have conspired precludes conviction of the remaining defendant. (ii) Arizona: Guilt is based upon each persons own actions and culpability. Therefore, in AZ, you can still be convicted even thought all other persons have been acquitted. There is no defense that others are immune or not criminally responsible. There is no defense that others did not have the required intent. There is not defense that others were legally incapable of committing the offense. C. Attempt: 1. MBE: (a) MPC (Majority): Required mens rea plus a substantial step beyond mere preparation, in the direction in the commission of a crime. (b) CL: Specific intent plus being in close proximity of completing the crime. (i) Attempt is a specific intent time, and therefore cannot be convicted of attempted CL murder 2. Arizona: Intentionally plus any act in furtherance is sufficient, and mere preparation is sufficient. (a) Impossibility is not a defense.

V.

Defenses A. Insanity: defense to all crimes, regardless of mental state requirements. 1. MBE: (a) McNaughton: a disease of the mind caused a defect of reason, such that at the time of his conduct, (1) D lacked the ability to know the wrongfulness of his actions or (2) understand the nature and gravity/quality of his offense. (b) Irresistible Impulse: Because of mental illness, D lacked the capacity for self-control and free choice to conform to the law. (c) Durham: Ds conduct is a product of Ds mental illness or defect. (d) MPC: D lacked the capacity to appreciate the criminality of his conduct, and lacked the ability to conform his conduct to the requirements of the law. 2. Arizona: At the time of the act, D was afflicted with a mental disease or defect of such severity that he did not know the act was wrong. Intoxication: 1. Voluntary Intoxication: (a) MBE: Defense to specific intent crimes (e.g. defense to burglary ok, but not Malice murder, GI battery or SL speeding). However, cannot develop intent then get drunk. (b) Arizona: voluntary intoxication is not a defense in Arizona. (c) Alcoholics and drug addicts are voluntarily intoxicated. 2. Involuntary Intoxication: Is like a form of insanity. Defense to all crimes, including the no-intent crimes of strict liability (e.g. you are held down and forced to drunk, you have had something unknowingly slipped into your drunk, but duress to drink is not involuntary).

B.

C.

D.

Duress: 1. Requirements: duress is a defense to a criminal act is the person acts under the threat of imminent infliction of death or great bodily harm and that belief is reasonable. 2. MBE: Duress is a defense to all crimes except homicide. 3. Arizona: The defense of duress is not available for homicide or crimes involving physical injury if you intentionally, knowingly, or recklessly place yourself in the situation. Infancy: 1. MBE: (a) Under 7 years old: no criminal liability (b) Under 14 years old: rebuttable presumption of no criminal liability. 2. Arizona: (a) Under 7 years old: no criminal liability Page | 65 of 153

(b) Under 14 years old: rebuttable presumption of no criminal liability. (c) If between 15-17, and a crime is a certain type of felony (1st D/2nd D murder, forcible assault, armed robbery, aggravated assault) there is an irrebutable presumption of capacity based on age and must be tried as an adult. E. Self Defense: is self defense is established, it will exculpate D from liability. 1. Non-Deadly Force: a person can threaten or use physical force against another when and to the extent a reasonable person would believe it is immediately necessary to protect himself against the others use or attempted use of unlawful physical force. (a) Arizona: Cannot allow one to claim self defense when that person provoked the others use of force. (b) Arizona: If in response to a verbal provocation alone or to resist arrest absent the officers use of excessive force, non deadly force is not allowed. (c) Arizona: there is no rigid rule to retreat, but the opportunity to retreat is relevant in determining the reasonableness of belief that force, deadly or otherwise, was immediately necessary. 2. Deadly Force: (a) MBE Majority Rule: a victim can use deadly force any time that victim reasonably believes that it is about to be used on them. (b) MBE Minority Rule: requires a victim to retreat if they can do so safely. Except, there is no duty to retreat when (i) In the home (ii) Victim of rape or robbery (iii) Police officers. (c) Arizona: there is no rigid rule to retreat, but the opportunity to retreat is relevant in determining the reasonableness of belief that force, deadly or otherwise, was immediately necessary. Defense of Property: deadly force may never be used to defend property. D was Original Aggressor: self-defense will not apply back to the original aggressor unless he (a) withdraws and (b) verbally communicates his withdrawal.

3. 4.

F.

Mistake of Fact:

Mental State Application of Mistake Defense Specific Intent Any mistake Malice and General Intent Reasonable Mistakes Only Strict Liability Never Mistake of fact: belief that a particular actions is not criminal Mistake of law: belief that the law does not cover his action Ignorance or mistake as to a matter of fact or law is a defense if it negatives the purpose, belief, recklessness or negligence required to establish a material element of the office. The question is to look whether a mistake in law or fact exculpates the defendants mens rea, and potentially thereby ridding him of liability for his or her criminal actions. E.g. Reasonable reliance on advice of counsel does not negate mental state. If Ds mistake or ignorance as to a collateral legal matter process that he lacked the state of mind for the crime, he is entitled to acquittal.

G. H.

Consent: Consent of victim is no defense. Entrapment: 1. MBE: (a) The criminal design must have originated with law enforcement officers (b) And D must not have been predisposed to commit the crime. 2. Arizona: (a) The criminal design must have originated with law enforcement officers (b) D must not have been predisposed to commit the crime, Page | 66 of 153

(c) And D must prove that the officers urged and induced D to commit the crime (e.g. please smoke that crack) VI. Offenses Against the Person: A. Battery 1. MBE (General Intent) (a) Harmful or offensive unpermitted contact (b) With another person. 2. Arizona: there is no crime of battery Assault 1. MBE: (Specific Intent) (a) Reasonable Apprehension (b) Of an immediate Battery 2. Arizona: (a) Knowingly: touching with the intent to insult, injure or provoke (b) Intentionally: placing in reasonable apprehension of imminent physical injury or (c) Intentionally, knowingly, or recklessly cause physical injury (non serious) (d) Aggravated Assault: the same as above plus: (i) Serious physical injury or (ii) Use of a deadly weapon or dangerous instrument or Deadly Weapon: designed for lethal force Dangerous Instrument: readily capable of causing death or serious physical injury (iii) V is a police officer, fireman, paramedic, health care etc. Must know it is a police officer Officer must be on duty at the time Physical force cannot be used to resist arrest (even if unlawful arrest) C. Homicide: (Of Human) 1. MBE: (a) Murder (i) Premeditated Murder (Specific Intent): intentional killing of another with acts of premeditation. (1st) Defense will Reduce to M: Voluntary Intoxication Mistake of Fact (ii) Serious Bodily Harm (Specific Intent): intent to bodily injure (but not kill) (e.g. death usually results from wounds). (iii) Felony Murder: unintentional killing during the commission of a felony crime Defenses If D has a defense to the underlying felony, he has a defense to the Felony Murder. If the felony is not distinct from the murder. (Agg. Assault) Death was unforeseeable. Death cause while fleeing from a felony are felony murders. But one D reaches a place of temporary safety, deaths cause thereafter are not felony murders. Co-Felon: Defendant is not liable for the death of a co-felon as a result of resistance by V or the police. Felonies: B Burglary A- Arson R Robbery (all deaths are foreseeable) R Rape K Kidnapping (iv) Depraved Heart: (General Intent) unintentional killing resulting from reckless conduct and disregard for an unjustifiable high risk to human life. (2 nd) Page | 67 of 153

B.

2.

Arizona:

(b) Manslaughter: (i) Voluntary Manslaughter: killing in the heat of passion resulting from an adequate provocation by V. The provocation must be one that would arose sudden and intense passion in the mind of an ordinary person. (ii) Involuntary Manslaughter: A killing that resulted from criminal negligence (e.g. falling asleep at the wheel) (iii) Misdemeanor Manslaughter: killing during the commission of a misdemeanor or one of the unenumerated felonies. (a) Murder: (i) 1st Degree Murder Premeditated Murder: intentional killing of another with acts of premeditation. Defense will Reduce to 2nd DM: a. Voluntary Intoxication b. Mistake of Fact Felony Murder: unintentional killing during the commission of a felony crime Death cause while fleeing from a felony are felony murders. But one D reaches a place of temporary safety, deaths cause thereafter are not felony murders. Co-Felon: D is liable for death of co-felon. Felonies: a. B Burglary b. A- Arson c. R Robbery (all deaths are foreseeable) d. R Rape e. K Kidnapping Homicide of Police Officer: the killing of an officer is the person knew or should have known was officer (ii) 2nd Degree Murder The killing of another without premeditation if Intent of cause death Knowledge that death or serious physical injury will be caused or Circumstances manifesting extreme indifference to human life and conduct that creates a grave risk of death. (b) Manslaughter: The killing of another: (i) Recklessly (ii) Killing upon a sudden quarrel or heat of passion upon adequate provocation from the V or (iii) Intentionally aiding another in suicide or (iv) Killing under coercion (v) Knowingly or recklessly cause the death of an unborn child at any state of its development by physical injury to the mother

VII.

Sex Offenses A. Rape: 1. MBE: the slightest penetration completes the crime of rape. 2. Arizona: no crime of rape rather list of sexual offenses. B. Statutory Rape: Strict liability; no mistake of fact or consent defense. Property Crimes A. Larceny 1. MBE (Specific Intent): A taking by trespass (stealing), the carrying away (asportation); of personal property of another; without consent with the intent to permanently deprive. (a) The slightest moving of the property is enough Page | 68 of 153

VIII.

(b) (c) (d) (e) 2.

Arizona:

Intent to deprive must exist at the time of taking Must have intent to deprive; you cannot believe you are taking something that is yours Crime involves possession only, not title (e.g. false pretenses) Larceny by Trick: same as above, but with lies, receipt or misrepresentation. If the intent of the victim is for the D to only possess the item and not keep it, it is larceny by trick and not false pretenses.

(a) Not Larceny, but Theft: knowingly and with (i) an intent to permanently deprive of property (ii) an intent to withhold permanently (iii) an intent to withhold long enough that it loses substantial value (iv) intent to withhold until a reward is paid or (v) intent to transfer or dispose (vi) Does not require movement or asportation of property.

B.

Theft of Stolen Property (Receipt of Stolen Property) 1. Specific Intent: Theft requires that D must believe that he is stealing; (e.g. could get attempted receipt of stolen property if he believed he was stealing, even if he owned the item impossibility is not a defense to attempt) 2. Once the police recover the stolen property, the property loses it stolen status Embezzlement: 1. MBE: lawful possession followed by illegal conversion. (a) The conversion does not have to benefit the embezzler. (b) Crime involves possession only, not title nor taking away (c) Often a trustee or CEO 2. Arizona: Theft by Conversion False Pretenses: 1. MBE: persuading the owner of property to convey title by a false pretense as to a present or past promise. (a) The false representation could be as to a present or past fact. (b) A false promise to do something in the future cannot be ground for liability for false pretenses (e.g. extortion). 2. Arizona: Theft by Deception Robbery (aka larceny + assault) 1. MBE: A taking of property of another; from his person or his presence; with the intent to permanently deprive; by force or threats of imminent harm. (a) Crime involves possession only, not title. 2. Arizona: (a) Aggravated Robbery: robbery with one or more accomplices (b) Armed Robbery: robbery using or threatening to use a real or simulated deadly weapon or dangerous instrument. Extortion: A taking not required, merely a threat of future harm. 1. Extortion v. Robbery: you dont have to take anything from the person or his presence like in robbery. 2. Threats are future, not imminent hard.

C.

D.

E.

F.

IX.

Offenses Against Habitation A. Trespass 1. Arizona: a person commits trespass when without lawful authority they enter or remain in or upon a fenced commercial yard. (a) This is a lesser included offense to AZ Burglary B. Burglary: 1. MBE: Breaking (actual or constructive); and entering into the dwelling house of another; at night; with the intent to commit a felony inside. Page | 69 of 153

(a) Actual: it is not an actual breaking for someone to come uninvited through a wide open door or window. If wide open there is not breaking. But if someone pushes open an interior door to the bedroom or living room then a breaking exists. (b) Constructive: a breaking by fraud or threat (e.g. I need the keys to get my purse) (e.g. fraud of identity to let the person in). (c) Entering: occurs when any part of the body crosses into the house (d) Dwelling House: cannot be a barn or commercial structure (e) Intent must exist at the time of the breaking 2.

Arizona:

(a) 3rd Degree (i) Business: A person commits burglary in the third degree by entering or remaining unlawfully in or on a nonresidential structure or in a fenced commercial or residential yard with the intent to commit any theft or any felony therein. (Includes car by making key too) (b) 2nd Degree (i) House: A person commits burglary in the second degree by entering or remaining unlawfully in or on a residential structure with the intent to commit any theft or any felony therein. (c) 1st Degree (i) With Weapon: first degree (d) At Night: does not have to be at night like CL (e) Intent: you do not need intent to commit the theft or felony at the time of entry.

C.

Arson: 1.

MBE: Malicious burning; of the dwelling house of another.

2.

Arizona:

(i) Has to be dwelling, cannot be barn or commercial struction (ii) Malicious is intentional and reckless (iii) Material wasting or charring of building fiber required. Scorching is not enough.

(a) Damage can be physical or visual impairment of any surface (b) Structure and Dwelling: can be home, commercial structure, vehicle, aircraft, boat, etc.

D.

Forgery (AZ): A person commits forgery when, among other things, with the intent to defraud, they falsely make, complete, or alter a written instrument. An intent to defraud can be inferred from circumstantial evidence, and it is not necessary that there by an intent to defraud a particular person. Also, it is irrelevant in determining intent whether an actual injury occurred. Taking the Identity of Another (AZ): A person commits the taking of the identity or another when, among other things, they knowingly use anothers identifying information, without consent, for any unlawful purpose. 1. The person whose identity is taken need not suffer an economic loss from the offense. False Reporting to Law Enforcement (AZ): a person commits false reporting when they 1. knowingly make to a law enforcement agency a false, fraudulent, or unfounded report or statement or when they 2. knowingly misrepresent a fact for the purpose of interfering with the orderly operation of a law enforcement agency or misleading a peace officer Kidnapping (AZ): A person commits kidnapping by knowingly restraining another person with the intent to among other things, aid in the commission of a felony. Misconduct Involving Weapons: proof that D knowingly possessed a deadly weapon and that D is a convicted felon. 1. Mistake of Fact is a defense (not mistake of law) 2. Requires knowledge of ones possession of a weapon, not knowledge of ones status as a felon. Drug Offenses (AZ):

E.

F.

G.

H.

I.

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1.

Possession: requires proof that D knowingly possessed the drug. Mere presense where the drug is found in insufficient to establish the D knowingly possessed the drug. D must have physical or constructive possession with actual knowledge of the presence of the narcotic substance. (a) Actual: require direct physical control (b) Constructive: when a person has the power and intention to exercise dominion and control over the item, either directly or through another. (dominion rather than ownership)

Hot Topics in Criminal Law Mental states i. General and [specific intent crimes and their additional defenses] 1. voluntary intoxication 2. any mistake of fact Transferred intent Accomplice Liability: accomplices are responsible for crime itself and all other foreseeable crimes. No accomplice liability if theyre present but not actively in on the crime Inchoate offenses: especially conspiracy Defenses i. Intoxication ii. Infancy: remember 7 and 14 iii. Self-defense iv. Mistake of fact Common Law crimes i. Homicide in general ii. Defenses to felony murder in particular iii. Distinguish between 3 common law property crimes iv. Robbery v. Burglary vi. Arson

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Criminal Procedure I. 4A Search & Seizure: The 4A protects people from unreasonable search and seizures by the governmental conduct. A. Government and Reasonable: In order for the 4A to apply, there must be both governmental conduct and a reasonable expectation of privacy in the area search and the items seized. 1. Government Conduct: (a) 4A protection only applies to government action (b) Three categories of government actor: (i) Police (on or off duty) (ii) Private citizens acting at polices direction (iii) Privately paid police, if deputized w/power to arrest Reasonable Expectation of Privacy: (a) Protected areas: (i) Persons (our bodies) (ii) Houses (includes hotel room) Includes curtilage area around the house (iii) Papers (personal correspondence) (iv) Effects (purses, backpacks, etc.) (b) No expectation of privacy in: [Patty Achieved A Glorious Victory Over Her Opponent] (i) Paint scraping (from outside of car) (ii) Account records held by a bank (iii) Airspace (iv) Garbage (left at curbside) (v) Voice (vi) Open fields (vii) Handwriting (viii) Odors (from car or luggage) B. Standing: In order to have a 4A claim, a person must have standing to assert the claim which requires the person to be asserting a violation of their right and not seeking exclusion vicariously through the rights of another. 1. You only have standing to challenge if YOUR personal privacy rights have been invaded, not those of a third party 2. So who has standing? (a) Owners of premises searched (b) Residents of premises searched (c) Overnight guests (as to areas the guest would be expected to access) (d) Owner of property seized (if you have a reasonable expectation of privacy in the area from which it was seized) (i) If you stash your drugs in your GFs purse no expectation of privacy (e) Passengers in car (if passenger has reasonable expectation of privacy in the item searched or seized (i.e., purse) 3. Who does not have standing? Individuals using anothers residence solely for business Warrant: To be reasonable under the 4A, a search must be conducted pursuant to a warrant supported by PC, unless it fails into an exception. 1. Facially Valid Warrant: (a) Two core requirements for a valid warrant: (i) PC a fair probability that contraband or evidence of a crime will be found in the area searched Hearsay is allowed to establish PC Police may rely on anonymous tips if they can corroborate the info enough for magistrate to make a common sense, practical determination that PC exists Page | 72 of 153

2.

C.

(ii) Particularity must specify place to be searched and items to be seized If particulars are contained in an affidavit, it must be incorporated into the warrant 2. Warrant Invalid, but Constitutional Based on Officers Good Faith: (a) An officers good faith overcomes constitutional defects in PC and particularity, unless: (i) The affidavit supporting the warrant is egregiously lacking in PC such that no reasonable officer would have relied on it Ex: affidavit states police received info from a confidential informant who is known to them and has provided reliable info in the past not good enough (ii) The warrant is egregiously lacking in particularity such that no reasonable officer would have relied on it Warrant authorizes search for all serial numbers and ID numbers on all property where PC existed only to presence of a stolen vehicle parked outside (iii) The district atty lied to or misled the magistrate who issued the warrant (iv) The magistrate was biased (wholly abandoned neutrality) Warrant Valid, but Search Not in Scope of Warrant: (a) Did officers exceed the scope of the warrant? (i) If warrant authorize a search of living room for firearms, they cannot search the bedrooms, or pill boxes (b) Did officers comply with Knock & Announce rule? (i) Must knock and announce presence and purpose before forcibly entering, unless officer believes doing so would be: Futile Dangerous, or Would inhibit the investigation No Valid Warrant, but Search and/or Seizure Falls Within Exception: (a) Exigent Circumstances (i) Evanescent evidence (i.e., would disappear or dissipate in time it takes to get a warrant) E.g., Scrapings under fingernails, blood evidence when breathalyzer refused (ii) Hot pursuit of fleeing felon Police may enter suspects home, or home of a 3 rd party into which he fled, to look for him During hot pursuit, any evidence of a crime in plain view is admissible (b) Search Incident to Arrest (custodial arrest) (i) Arrest must be lawful (ii) Justification: concern for officer safety and need to preserve evidence (iii) Timing: search must be contemporaneous in time & place with the arrest (iv) Geographical scope: wingspan (grab area) Includes body, clothing, and any containers or effects (v) For automobiles: Under Gant, police may search passenger compartment only if at time of search: Arrestee is unsecured and may gain access to interior of vehicle; or Police reasonably believe that evidence of the offense for which the person was arrested may be found in vehicle Note: Gant does not affect automobile exception: 1. May still search automobile if they have PC to believe it contains contraband or evidence of a crime 2. May still search automobile for weapons if they reasonably believe the detainee is armed & dangerous (c) Consent: A person with an apparent right to use or occupy the property may consent to a search. (i) Must be voluntary and intelligent Page | 73 of 153

3.

4.
(ESCAPIST)

Exigent
circumstances

Search incident to
arrest Consent Automobile Plain view Inventory Special Needs Terry Stop & Frisk

Police need not inform them of right to refuse consent (ii) Apparent authority: if police obtains consent from someone who lacks authority, search is still valid if officer reasonably believed they had authority Ex: GF who allows search of their apartment, claiming she lives there with her BF when she actually doesnt (iii) If premises are shared, either party who lives there may consent (iv) If co-tenants disagree regarding consent, objecting party wins but may only prevent search of areas over which the parties share dominion and control (d) Automobile exception (i) Officers need PC to believe that contraband or evidence of crime will be found in vehicle (ii) Where can officers search? Passenger cabin Trunk May open any package, luggage, container that may reasonably contain the item they are searching for (iii) In traffic stop Officer does not need PC at time car is pulled over BUT, must have PC before initiating the search (i.e., after spotting reported stolen merchandise in the back seat) (e) Plain View (i) Three requirements: Must have lawful access to place from which the item can be plainly seen Must have lawful access to the item itself The criminality of the item must be immediately apparent (f) Inventory Searches (i) Most commonly: When arrestees are booked into jail When vehicles are impounded (ii) Standard: inventory searches are constitutional if the regulations governing them are: reasonable in scope, and the search itself complies with those regulations

(g) Special needs (i) Special needs of law enforcement, government employers and school officials justify dispensing with the warrant requirement (ii) Random drug testing has been upheld for: RR employees after an impact accident Customs officials responsible for drug interdiction Public school children participating in extra-curricular activities (iii) Probationers homes: Warrantless searches allowed where police have reason to believe contraband is present (iv) Government employees desks & files: Permitted to investigate work-related misconduct (v) Students effects in public schools: Allowed to investigate violations of school rules (vi) Border Neither citizens nor non-citizens have any 4th Am. rights at the border w/respect to routine searches of persons & effects (h) Terry stops and Frisks (i) Terry stop = brief detention or seizure to investigate suspicious conduct (ii) Terry frisk = pat down of body and outer clothing for weapons (iii) Police only need reasonable suspicion: Specific & articulable facts that lead them to believe 1. criminal activity is afoot (for a stop), or 2. a suspect is armed & dangerous (for a frisk) Page | 74 of 153

II.

(iv) NOTE: Terry frisk is justified by concern for officer safety only; it is not a general search for criminal evidence (v) What can you seize? A weapon can always be seized Other contraband that can be recognized without manipulating it (crack pipe most common ex.) (vi) When are you seized for 4th Am. purposes? When, based on a totality of the circumstances, a reasonable person would not feel free to: 1. leave, or 2. decline an officers request to answer questions (vii) When evaluating whether person has been seized on street, airport concourse, or bus, consider: Whether officer brandished a weapon Officers tone & demeanor during questioning Whether individual was told of his right to refuse to consent (viii) An individual who is being pursued by police officer is seized only if he: Submits to the officers authority by stopping, or If officer physically restrains him (ix) Who is seized during a traffic stop? The driver and all passengers All have the authority to challenge the legality of the stop (x) Are dog sniffs permissible? Yes, if they dont prolong the stop unreasonably K-9 can sniff around your car while officer runs computer check of license and registration Use of Inadmissible Evidence: A. Exclusionary rule: 1. Rule is a court-created doctrine used to suppress evidence that was obtained in violation of a Ds 4, 5, and 6A rights, which are applied to the states via incorporated to the states through the 14A Evidence (physical or testimonial) obtained in violation of a federal statutory or constitutional provision is inadmissible in court against the individual whose rights were violated 2. This is a court-created doctrine, incorporated to the states through the 14A 3. 4A Limits on Exclusionary Rule: (a) Evidence is excluded from the prosecutors case-in-chief only; it may be introduced to impeach the Ds testimony on cross (b) Exclusionary rule does not apply to: (i) Grand jury proceedings (ii) Civil proceedings, or (iii) Parole revocation hearings (c) Knock & Announce violations do NOT require suppression of evidence subsequently discovered (d) Exclusionary rule does not apply to evidence erroneously obtained by officer when executing search warrant provided him mistake was reasonable

B.

Fruit of the Poisonous Tree 1. Fruit of the Poisonous Tree (FOPT) = Evidence derived by exploiting prior constitutional conduct 2. How can prosecution nullify FOPT so as to allow introduction of derivative evidence? (a) By showing break in the causal link in the original illegality and the criminal evidence that is later discovered (b) Three doctrines break this causal connection: (i) Independent Source doctrine: there is an independent source for the discovery & seizure of the evidence that is distinct from the original illegality (ii) Inevitable Discovery doctrine: the evidence would have necessarily been obtained by the police lawfully (iii) Attenuation doctrine: Ds free will has been restored through passage of time & intervening events

III.

Wiretapping and Eavesdropping Page | 75 of 153

A. B. C.

Requires a warrant Everyone assumes the risk that the person to who he speaks will give the information to the government. Four requirements for valid wiretap warrant: 1. PC 2. Persons (must be named) 3. Conversations (must be particularly described) 4. Time (must be for a strictly limited time period)

IV.

Confessions: Three constitutional challenges that can be brought to exclude a confession; 1. 14A Due Process: Even if a confession is not in violation of self-incrimination provisions or in violation of ones right to counsel, conduct may still be in violation of due process. A confession is only admissible if it was freely and voluntarily made, without duress, fear, or compulsion in it s inducement. (a) Involuntariness confession was product of police coercion 2. 6A Right to Counsel: (a) The 6A guarantees a criminal defendant the right to counsel in all criminal proceedings and at all critical states of the proceedings after judicial proceedings have begin. (i) Attaches when D is formally charged, NOT upon arrest (b) After the right attaches, the police may not question the defendant without the presence of counsel unless the D waives that right. (i) This right also applies to questioning by an undercover agent who attempts to elicit incriminating statements. (c) However, the right is offense specific. Thus, even if a Ds rights have attached regarding the charge for which he is being held, he may be questioned regarding unrelated uncharged offenses without violating the 6A right to counsel. (i) Right is offense specific applies only to charges filed against you Ex: if you invoke right, then police start questioning you about a different, uncharged crime, your right to counsel does not apply to new questioning 5A Miranda Doctrine (a) The 5A protects people from compelling self-crimination. Under Miranda, a suspect is entitled to be informed of his right against self-incrimination and his right to counsel when he is subjected to custodial interrogation. (i) Core warnings: Right to remain silent Anything you say can and will be used against you in court of law Right to an attorney If you cannot afford an atty you have the right to have one appointed for you (ii) Custody occurs when there has been a deprivation of a persons freedom of action or the degree associating with a formal arrest. Here Custody = police domination + coercion, such that freedom of action is limited in significant way (iii) Interrogation is any words or actions on the party of the police that the police should know are reasonable likely to elicit an incriminating response from the subject. Here.. Interrogation = any conduct police know or should know is likely to elicit an incriminating response (b) Miranda does not apply to incriminating statements made spontaneously, since they are not a product of interrogation (c) Public safety exception: (i) If interrogation is prompted by an immediate concern for public safety (where did you stash the gun!!?), warning is unnecessary and any incriminating stmts are admissible (d) Valid Miranda waiver (i) Must be knowing and intelligent, and voluntary Knowing & intelligent = suspect understands the nature of the rights and the consequences of abandoning them Page | 76 of 153

3.

Miranda rights cannot be waived by silence or shoulder shrugging (ii) Burden of proof Prosecution bears burden of proving rights were validly waived, by preponderance of evidence (e) Miranda rights are NOT offenses specific (i) Interrogation after a request for counsel under Miranda is prohibited (ii) Once a suspect requests counsel ALL interrogation must cease, unless initiated by the suspect (f) Limitations on evidentiary exclusion: (i) Prosecutor may not use incriminating statements obtained in violation of Miranda in his case-in-chief, but may use them to impeach Ds testimony on cross (ii) Physical fruits of unwarned but voluntary statements need not be excluded Ex: suspect confesses to killing his business partner and tells officer where he hid the weapon. If entire interrogation violates Miranda, weapon is admissible but statements are not. (g) If testimony in violation of Miranda is improperly admitted at trial and D is convicted, must court vacate the guilty verdict? (i) Only if government can prove beyond reasonable doubt that error was harmless b/c D would have been convicted w/o the tainted evidence

V.

Pre-trial Identification: A. Three types: 1. Line ups W is asked to ID perpetrator from a group 2. Show ups one-on-one confrontation between W and suspect 3. Photo arrays W picks perpetrator from series of photos B. Two challenges to pretrial ID: denial of right to counsel, and denial of Due Process 1. Right to counsel (a) No 5th Am. right to counsel under Miranda for pre-trial ID procedures (b) 6th Am. right to counsel exists at line-ups and show-ups that take place after formal charging (not photo arrays) 2. Due Process standard (a) A pretrial ID procedure violates DP clause of 14th Am. when it is so unnecessarily suggestive that there is substantial likelihood of misidentification 3. Remedies for constitutional violations in pretrial ID procedures: (a) Exclusion of Ws in-court identification (b) BUT, identification will still be allowed if prosecution can prove it is based on observations of the suspect other than the unconstitutional line-up, show-up or photo array (i) May point to: Ws opportunity to view the D previously The certainty of the identification, and Specificity of the description originally provided to police

VI.

Trial Procedures A. Bail 1. Immediately appealable. 2. Preventative detentions are Constitutional. 3. At Preliminary Hearing to determine PC to hold, both sides are entitled to counsel and testimony. B. Grand Juries 1. 5th Amendment Right to Grand Juries has not been incorporated to the States. 2. The Exclusionary Rule does not apply to the conduct of grand juries. A grand jury witness may be compelled to testify based on illegally obtained evidence. 3. Grand jury proceedings are secret. Judicial Action 1. Bias (a) A judge may be determined as biased if he/she has Page | 77 of 153

C.

(i) A financial interest in the case; or (ii) Actual malice towards a party. 2. Coercion: (a) The invitation by a judge to a jury regarding trial instructions should not be coercive, suggestive or unduly intrusive and nothing in the instruction should be said to have displaced the independent judgment of the jury. Ex Parte: (a) Trial courts should avoid ex parte communications with jurors, particularly during deliberations, even at a jurers request and even if counsel objects. (b) A harmless error is when, beyond a reasonable doubt, there was no prejudice to the D resulting from a communication between the judge and jury outside the presence of D and counsel.

3.

D.

Right to a Jury Trial: Under the due process clause of the 14A, a D has a right to a fair and impartial trial. 1. This right includes the right to have a jury free from unfair influences. 2. Attaches when the maximum authorized sentence exceeds 6 months. (a) If the sum of the criminal contempt sentences exceeds 6 months, there is a right to a jury trial. 3. The minimum number of jurors is 6, but they must be unanimous. (a) A unanimous 12 person jury is not required. 4. Right to a jury of a cross-section of the community. (a) The right only attaches to the pool of prospective jurors, not to an individual jury. 5. Preemptory Challenges: It is Unconstitutional for the Prosecution or Defense to exclude jurors on the basis of race or gender. Fairness to Opposing Party and Counsel 1. In trial, a lawyer must not state a personal opinion as to the justness of a cease of the guilt or innocence of the accused. 2. In order to establish reversible error for prosecutorial misconduct, a D must demonstrate that the prosecutors conduct so infected the trial with unfairness as to make the resulting conviction a denial of due process. (a) The conduct must be so pronounced and persistent that it permeates the entire atmosphere of the trial, thereby the court recognizes the cumulative effect of the misconduct. Right to Effective Assistance of Counsel 1. Ineffective assistance of counsel claims require: (a) Counsels conduct was deficient; and (b) But for the deficiency, the result of the proceedings would have been different. 2. Not ineffective: (a) Trial tactics (b) Failure to argue non-frivolous issues (c) Rejection of a continuance (d) A Constitutional defense that was later invalidated was not raised 3. Claims of ineffective assistance of counsel cannot be raised on direct appeal, but instead must be brought in post-conviction proceedings. Harmless Error: for an error to be harmless, the court must find beyond a reasonable doubt that the error did not contribute to or affect the verdict.

E.

F.

G. VII.

Guilty Pleas & Plea Bargaining A. The U.S. Supreme Court wont disturb guilty pleas after sentencing if the plea was an intelligent choice among options after consulting with counsel. B. Plea bargains are treated like contracts and the court holds both parties to the terms of the bargain. C. When taking a plea bargain, the judge must tell the Defendant in person of the: 1. Nature of the charge 2. Authorized maximum sentence and any mandatory minimums. 3. Right to plead not guilty and go to trial 4. Pleading guilty waives the right to trial. D. The trial court must determine whether factual basis exists for each element of the crime. The factual basis need not be found beyond a reasonable doubt, but rather may be established by strong evidence of guilt. Page | 78 of 153

E. F.

Remedy for judicial non-compliance: withdraw the plea and start over. Four good bases to withdraw after sentencing: 1. Plea was involuntary 2. Lack of jurisdiction 3. Ineffective assistance of counsel 4. Failure of Prosecutor to keep the bargain

VIII.

Sentencing A. Generally, a Defendant may not get a harsher sentence on re-trial after a successful appeal. B. Death Penalty: Any death penalty statute that does not give the Defendant a chance to present mitigating facts and circumstances is Unconstitutional. 1. There can be no automatic category for imposition of the death penalty. 2. The State may not by statute limit mitigating factors; all relevant mitigating evidence must be admissible or the statute is Unconstitutional Collateral Attack on Appeal A. Habeas: challenges the lawfulness of any detention. The Petitioner is the Defendant. The Respondent is the person doing detaining. 1. There is no right to counsel for a habeas petitions. 2. The Petitioner bears the burden of showing the unlawfulness of his detention by the civil standard. (a) If granted, the State may appeal of retry the Defendant. 3. A person must be in custody to petition for habeas Double Jeopardy A. Attachment: 1. Attaches at a jury trial when the jury is sworn in. 2. Attaches at a bench when the first witness is sworn in. 3. Jeopardy does not attach at a civil trial. B. Exceptions to double jeopardy attachment: 1. The jury is unable to agree on a verdict. 2. Mistrial for manifest necessity, not on the merits 3. Retrial after a successful appeal. 4. Breach of an agreed upon plea bargain by the Defendant. (a) Plea and sentence are withdrawn and original charges are reinstated. C. Same offense requirement (Merger): two crimes are not the same if each requires the proof of an additional element that the other crime does not. 1. Lesser-included offenses: once jeopardy for the greater or lesser offense attaches, it bars charging the other. (a) Exception: If battery later results in death, then charging murder is permissible. D. Separate sovereigns: the federal and state governments are separate sovereigns and can charge the same crime. State and municipal governments cannot. 5A Privilege Against Compelled Testimony A. Anyone can assert in any case. 1. The privilege can be asserted in any civil, criminal, administrative or Congressional matter. (a) If a person does not claim privilege regarding an issue in civil proceedings, then the person barred from claiming privilege later in criminal proceedings. 2. Doesnt protect physical evidence or production of documents. (a) Only protects compelled testimony (e.g., lie detector tests and police interrogations.) B. It is Unconstitutional for the Prosecutor to make a negative comment regarding Defendants failure to testify or remaining silent upon hearing the Miranda warnings. C. Three ways to eliminate Privilege: 1. Use and Derivative Use Immunity: when the government agrees not to use your incriminating testimony or any derivative of it to convict you 2. No possibility of incrimination: Statute of Limitations has already run, etc. 3. Waiver: a criminal Defendant waives by taking the witness stand as to all legitimate subjects of cross-examination (i.e., cant testify for his own atty then take the 5 th for cross-exam)

IX.

X.

XI.

Hot Topics of Criminal Procedure: Page | 79 of 153

I. II. III. IV. V. VI. VII.

Exclusion and its limitations a. Fruit of the Poisonous Tree Doctrine Search and Seizure Miranda Pre-trial identification (lineups, showups) Right to jury trial and guilty pleas (which waive jury trial) Ineffective assistance of counsel Double Jeopardy and the 5th Amendment privilege against compelled testimony

Page | 80 of 153

Evidence I. Relevance A. Background 1. Relevance: Evidence is relevant if it has any tendency to make a material fact more or less probable. 2. All relevant is admissible unless (a) Some specific exclusionary rule is applicable, or (b) (403 Balancing Test) If the court makes a discretionary determination that the probative value of the evidence is substantially outweighed by pragmatic considerations: (i) Accuracy: Unduly prejudicial Confusing to the jury Misleading the jury (ii) Efficiency: Undue Delay Waste of Time Unduly Cumulative B. Similar Occurrences 1. Generally, inadmissible. 2. However, in 6 specific circumstances, other similar occurrences may be admissible, even if they relate to a time, event, or person other than that involved in the litigation. (a) Plaintiffs accident history (i) Inadmissible because it shows nothing more than the fact P is accident prone. Shows they merely have a general propensity for carelessness and is character evidence. But is admissible to show, if Ps damages is in issue: Fraudulent scheme or plan Causation (e.g., injury here was caused in prior accident) (b) Similar accidents caused by the same event or condition: other accidents involving the same instrumentality or condition, and occurring under substantially similar circumstances may be admitted to show: (i) Existence of a dangerous condition (ii) Causation (e.g., other workers got sick) (iii) Prior notice to Defendant (c) Intent in Issue: persons prior conduct may provide inference of intent on later occasion (e.g., pattern of hiring based on race). (d) Comparable sales on issue of value: selling price of comparable property (e) Habit: habit of person (or routine of a business organization) is admissible as circumstantial evidence of how the person or business acted on the occasion at issue in litigation. The action must be semi-automatic, and free of independent choice. This is an exception on the general rule that character evidence is inadmissible in a civil case. (i) Characteristics: Frequency of the conduct, and Particularity of the conduct (ii) Key Words: always, invariably, automatically, instinctively (f) Industrial Custom as to the issue of Standard of Care: evidence as to how others in the same trade of industry have acted in the recent past may be admitted C. Excluding Otherwise Admissible Evidence 1. Liability insurance (a) Evidence that a person has (or doesnt have) liability insurance is inadmissible for the purpose of providing fault or the absence of fault. (b) But, it may be used for another relevant purpose, such as: (i) Proof of ownership or control, if controverted (ii) Impeachment of a witness for bais (e.g., witness is claims adjuster) Page | 81 of 153

2.

407 Subsequent Remedial Measures (a) SRMs are inadmissible to prove: (i) Negligence (ii) Culpable conduct (iii) A product defect (iv) Need for a warning (b) But, SRMs may be introduced for another relevant purpose, such as: (i) Proof of ownership or control, if controverted (ii) Feasibility of a safer condition, if controverted (iii) Noitce 408 Compromise and Offers to Compromise (Settlement) (a) Evidence made during settlements, offers to settle, or statements made in settlement discussions are inadmissible if : (i) offered to prove liability, and (ii) arises from a disputed claim Claim has been made by P (but not necessarily a lawsuit filed) D disputes liability or damages amount (b) But, settlement may be admissible if offered to impeach a witness for bias (but not party to settlement who made statement). 409 Payment of Medical and Similar Expenses (a) Inadmissible to prove liability (b) Doesnt include other statements made in conjunction with offer. 410 Inadmissibility of Pleas, Plea Discussions, and Related Statements (a) The following are inadmissible against a Defendant in pending criminal litigation or subsequent civil case: (i) Offer to plead guilty (ii) Withdrawn guilty plea (Note: guilty plea that is not withdrawn is admissible) (iii) Plea of nolo contendere (iv) Statements of fact made during any of the above

3.

4.

5.

D.

Character Evidence: a persons general propensity or disposition 1. Introduction: (a) Must ask what is the purpose of the evidence. There are 4 possible purposes: (i) Propensity (usually inadmissible) (ii) Veracity of Witness (admissible) (iii) Non-propensity purpose (admissible) (iv) Trait is an essential element of the claim or defense (admissible) Character Evidence in Criminal Cases (a) Defendant: Defendants Character offered by the Defendant (i) Not generally admissible to prove propensity. (ii) D may introduce evidence of relevant character trait in case in chief of own good character by Reputation Opinion (iii) No evidence of specific acts allowed (iv) If D does so, prosecution can rebut with evidence of bad character. (b) Prosecution: Defendants Character offered by the Prosecution (i) Prosecution may rebut once D has opened the door (e.g. cannot do it in states case in chief) can do it by: (1) Calling its own witnesses regarding Reputation Opinion

2.

Page | 82 of 153

(2) Or may cross-examine Ds witness by questioning their knowledge of relevant specific bad acts. Purpose must be to test witness knowledge of Ds reputation and soundness of witness opinion, but not to prove prior act. Reputation witnesses: Have you heard Opinion witnesses: Did you know Prosecutor must take the answer of the witness, and cannot move forward to prove prior act. Can only inquire, not prove.

(c) Victims Character in a Self Defense Case (i) Criminal D may offer evidence of victims violent character to prove that the victim was the first aggressor Form: reputation or opinion (not specific acts) Prosecution may rebut with evidence of Ds bad character or victims good character Arizona: Rebuttal is limited to evidence of victims good character. (ii) Homicide: if D offers evidence of any kind that victim was first aggressor, P may introduce evidence of Vs good character for peacefulness. (iii) Relevance: of D claims self defense, and D was aware of victims violent reputation showing reasonable fear, that awareness may be admissible. (d) Victims Character in Sexual Misconduct Case (i) Rape Shield Rule: Defendant may not introduce evidence of: Victims reputation for promiscuity; or Victims prior sexual conduct (ii) Exceptions: a Defendant may introduce: Evidence of victims sexual activity with the Defendant, but only if defense is consent Evidence of victims sexual activity with others, but only to prove other source of physical evidence (iii) Arizona: rape shield rule applies only in criminal case. Opinion and reputation evidence about Vs chastity and prior specific sexual conduct is admissible only if: Occurred with D Shows different source of semen, pregnancy or injury Shows V to have motive to accuse D Impeaches V after prosecutor has put Vs conduct in issue Consists of false allegations of sexual miscount against others. 3. Character Evidence in Civil Cases (a) Character evidence is inadmissible to prove propensity in civil cases. (b) Exception: admissible where character is essential element of claim (specific acts okay too): (i) Tort Action: Negligent Hiring or Entrustment (e.g. D is employer knowing the person he hired is careless) (ii) Defamation (e.g., liable and slander) (Ps character is what the tort is about) (iii) Child Custody Dispute (e.g. character of parent).

E.

Defendants Other (Past) Crimes for Non-Character Purpose (aka Other Specific Bad Acts) 1. Defendants other crimes are inadmissible to prove propensity. But, evidence of past crimes may be used for purpose other than propensity, but rather show something specific about the crime charged [MIMIC] (a) Motive (e.g., murder of arresting officer) (b) Intent (e.g., state of mind - drug seller or user) (c) Mistake or accident (absence of) (d) Identity (e.g., other robberies that disprove alibi) (e) Common Scheme or Plan (modus operandi) 2. Methods: Ways prosecution can prove MIMIC evidence: (a) A conviction (b) Evidence that tends to prove that prior bad act occurred Page | 83 of 153

3.

Burden of Proof: of prosecution proving MIMIC-purpose crimes: (a) Federal: sufficient evidence for reasonable jury to conclude that Defendant did it by a preponderance of the evidence (b) Arizona: a prerequisite to admissibility, trial court (judge) must find by clear and convincing evidence that D committed the MIMIC crime. Other requirements: (a) Pragmatic considerations: court must weigh probative value v. prejudice (b) Limiting constructions re: limited purpose of MIMIC evidence (c) Pre-trial notice: if requested, prosecution must tell D of intent to use it Civil Cases: MIMIC evidence may also be used in civil cases for tort actions for fraud or assault

4.

5. F.

Prior Sexual Misconduct to show Propensity for Sexual Assaults 1. Federal rule: prosecution may offer evidence of Defendants prior sexual assaults for the purpose of proving the Defendants propensity (e.g., sexual offenders are likely to repeat). (a) Sexual Assault (b) Child Molestation 2. Arizona: prior sex crime must be proven with clear and convincing evidence for finding by judge.

II.

Judicial Notice A. Definition: recognition of a fact as true without formal presentation of evidence B. A court may take notice of an indisputable fact when it comes in 2 forms: 1. Matters of common knowledge w/in courts territorial jurisdiction 2. Matters capable of easy verification by resort to unquestionable sources C. May be taken at any time, including appeal. D. Judicially noticed facts are conclusive in civil cases, but not in criminal cases. Documentary Evidence A. Authentication 1. Overview: (a) The party seeking to introduce exhibit must introduce sufficient evidence for a reasonable juror to conclude that the item is what the party claims it to be. (b) If the relevance of a writing depends on its source/authorship, must prove it (c) Methods of authenticating writings: (i) Testimony by witness with personal knowledge (ii) Proof of authors handwriting; Lay person opinion (acquired familiarity with persons handwriting in life) Expert Comparison Opinion Jury Comparison (iii) Ancient Document Rule: authenticity inferred if: Document is > 20 years old Facially free from suspicion (e.g. no white out) Document is found where it is to be expected (place of natural custody) (iv) Solicited Reply Doctrine (e.g. if its in reply to prior communication to author) (d) Conditional Relevancy Standard: document is admissible if court determines there is sufficient evidence from which a reasonable juror could conclude document is genuine. 2. Self-Authenticating Documents (Presumed Authentic): (a) Official publications (e.g. government regs) (b) Certified copies of public or private docs on file in public office (c) Newspapers or periodicals (d) Trade inscriptions and labels (e.g., candy bar wrapper) (e) Acknowledged document (e.g. doc that has on it a notary certification). (f) Commercial paper (g) Certified Business Records: certified by someone w/in business who knows how records are regularly made, and that these documents were made in the regular way, at or about the time of the event recorded. Page | 84 of 153

III.

3.

Authentication of Photos & Recordings (a) Photo as demonstrative evidence: witness must say its a fair & accurate representation of the people/things portrayed (i) Personal knowledge needed, but does not have to be the photography (b) Photo as silent witness: Party offering it must show (i) Camera was properly installed and working (ii) Film was properly removed and developed (iii) Film has not been tampered with (by chain of custody evidence)

B.

Best Evidence Rule: only applies to writings 1. Rationale: we would rather have jury see the original writing, than her from someone about it. 2. Method: If a party seeks to prove the contents of a writing, it must either: (a) Produce the writing; or (b) Provide an acceptable excuse for its absence 3. Contents: Applies only when a party seeks to prove the contents of a writing, like when: (a) Writing is a legally operative document (e.g., contract, deed, patent) (b) Witness is testifying to facts learned solely from reading in document 4. Best Evidence Does Not Apply When: Does not apply when witness has personal knowledge independent from document 5. What is an Original: Original writing = the writing itself, or any counterpart intended to have same effect (a) Duplicates are admissible as it was an original, unless: (i) There is a genuine question about the authenticity of the duplicate (ii) It would be unfair to admit the duplicate (b) Duplicates made as part of litigation and handwritten copies do not count. 6. When the Original Cannot be Produced: Parties not producing the original are excused if the original: (a) Is lost or cannot be found with due diligence; or (b) Has been destroyed without bad faith; or (c) Cannot be obtained with legal process (beyond subpoena power of court) 7. Escapes from requirements of the best evidence rule, where original is available, but it wouldnt be a good idea or pointless to present it: (a) Voluminous records can be presented through a summary (b) Certified copies of public records can substitute for originals (c) Collateral (unimportant) documents, at the courts discretion

IV.

Real Evidence A. Actual physical evidence displayed to the trial of fact (e.g., drugs, guns, etc.) B. Authentication Rule: party seeking to use must introduce sufficient evidence that the item is what the party claims it to be. This is accomplished by laying foundation: 1. Personal knowledge (e.g., W recognizes the object) 2. Chain of custody (must be substantially unbroken) C. Condition: evidence must be in substantially the same condition (not tampered with) Testimonial Evidence (Witnesses) A. Competency of a Witness. 2 Requirements for witness to be competent to testify: 1. Witness must have personal knowledge 2. Witness must take an oath (demonstrate understanding of obligation to tell the truth, and promise to tell the truth) B. Dead Mans Statute 1. An interested witness in civil cases only, is not ordinarily incompetent merely because she has an interest a direct legal stake in outcome of the litigation. (a) Federal: there is no Dead Mans statute (b) MBE: In civil action: interested party is incompetent to testify in support of her own interest against the estate of a decedent concerning communications or transactions between the interested party and the decedent. (i) Waiver: dead persons rights may be waived if: Decedents representative doesnt object or testifies about transaction; or Page | 85 of 153

V.

Decedents testimony is introduced

(c) Arizona: Neither opponent or estate nor estate representative may testify to transaction with decedent, except court has discretion to allow such testimony. (i) If there is independent corroborating evidence of the transaction (ii) Injustice would result from rejection of the testimony C. Questioning Witnesses: 1. Leading Questions (a) Leading questions allowed on cross, not allowed on direct (b) Exceptions: leading questions are allowed on direct: (i) Preliminary matters (ii) Youthful or forgetful witness (iii) Hostile witness (iv) Witness is the adverse party or someone under their control Use of Writings in Aid of Oral Testimony of Witnesses 1. Present Recollection Refreshed (a) Jogging Memory: If a witness forgets something he once knew, he may be shown anything to jog his memory (this is an exception to prohibition on witnesses reading) (b) No need for authentication nor best evidence rule (c) Once memory restored, writing cannot be read into evidence and must be put away. (d) Safeguards against abuse: the opposing party has the right to: (i) Inspect it (ii) Use it on cross-examination (iii) Introduce it into evidence (e.g., not read into evidence by witness) 2. Past Recollection Recorded (hearsay exception) (a) A writing may be read to the jury if: (i) Present Recollection Refreshed fails The witness once had personal knowledge The witness now forgets (evidence isnt enough to job memory) (ii) Writing was either made or adopted by the witness (iii) Writing as made while the event was fresh in the witness memory (iv) Witness vouches that the writing was accurate when made. (b) Document can be read to the jury, but not shown to the jury (c) Example: witness forgets license plate number (PMBR 13)

D.

E.

Opinion Testimony 1. Lay Witness Opinions (a) Personal Knowledge: Admissible if it is rationally based on the witness perception (personal knowledge) and (b) Helpful: is helpful to the jury. (i) Examples: witness may testify about sobriety, emotions, speed, smells, etc. (ii) Lay witness may not testify as to whether he thinks D is guilty. 2. Expert Witness Opinions (a) An expert may state an opinion or conclusion provided the subject matter is one where scientific, technical or other specialized knowledge would assist the trier of fact, the witness is qualified as an expert, the expert possesses reasonable probability regarding his opinion and the opinion is supported by a proper factual basis. (b) Education or Experience: Witness may testify as an expert if the witness is qualified (c) Proper Subject Matter: and testimony is about subject matter where specialized info will be helpful to the jury. (d) Basis of Opinion: opinion must have proper basis, and must be reliable. 3 possible sources: (i) Experts personal knowledge Note: Expert witness cannot testify as to whether D had proper intent to commit crime. Page | 86 of 153

(ii) Evidence that is already in the trial record (iii) Facts outside the record if of a type reasonably relied upon by experts in the field (e.g., interviews, reports, studies, etc.) (e) Reliability: expert must have used reliable methods and reliably applied them (i) Reliability Standard for Scientific Evidence Federal rule: Daubert Standard Testing of principles or methodology Rates of error (e.g. high or low rate of error) Acceptance by general scientific community Peer review in area of expertise Arizona: If expert is relying on scientific principles or techniques developed by others, they have met with general acceptances in the relevant scientific community. But, expert whose testimony is based on her own experience, observation or research need not satisfy general acceptance standard. (ii) Learned Treatise in Aid of Expert Testimony Federal rule: if a party can establish that a treatise is a reliable authority they may: may be used on direct (by partys own expert) relevant portions of treatise may be used cross-examination (by opponents expert) read into to impeach and contradict expert. may be read to the jury as substantive evidence (hearsay except.), but it may not be introduced into evidence (iii) Ultimate Issues: Opinion testimony (lay or expert) is permissible even if it addresses an ultimate issue in the case (ex. that is Xs signature on the check), if all the other requirements for opinion testimony are satisfied. This has been abolished from the FRE Criminal Cases: is still a proper objection if expert seeks to give direct opinion the D did or did not have relevant mental state. Arizona: police officer opinion of D in DWI; may not give a direct opinion that the D appeared intoxicated or under the influence (e.g. police can only describe what symptoms D displayed, but lay person can say I thought he looked drunk). F. Cross-Examination 1. Cross-examination is a right. 2. Proper subject matter includes: (a) Witness credibility (b) That which is in the scope of direct exam (i) Arizona: not limited to scope of direct examination, may question witness on anything relevant to case. Credibility and Impeachment 1. Overview: (a) Bolster Credibility of Own Witness: In general, not allowed until after the witnesss credibility has been attacked. (b) Impeachment of Own Witness: permitted, without limitation. (c) Prior Consistent Statement (i) Prior Identification of Person: not barred by hearsay rule. Reliability: identification was closer in time to event and witness on stand can be cross-examined. (d) Proving Impeachment (i) Extrinsic Evidence Page | 87 of 153

G.

(ii) Do you have to confront the Impeached Witness? 2. Impeachment Methods (a) Prior Inconsistent Statements (i) Definition: Prior statement (oral or writing) that is materially inconsistent with witness trial testimony. (ii) Purpose: may be used only for limited purpose to impeach, not as substantive evidence (e.g. the prior inconsistent statement is hearsay if offered as substantive evidence meaning, to prove the trust of the matter asserted in the statement). Exception: may be used as substantive evidence if statement was made: Under oath as part of a formal hearing, proceeding, trial, or deposition. (A testimonial setting). (iii) Procedural considerations: witness must be given chance to explain or deny the prior inconsistent statement. However, not required to immediately confront the witness while the witness was on the stand, but they must have change to come back to explain or deny. (Unless it is a party to the suit - P or D). Federal: inconsistent statement may be proved extrinsically, as long as witness is allowed to return to stand and explain. Arizona: any prior inconsistent statement may be used as substantive evidence. (b) Bias, Interest or Motive to Misrepresent (i) Definition: some relationship that could cause the witness to lie (ii) Procedural issues: basis is so important, it may be proved extrinsically. Do not have to confront witness with bias while they are on the stand (c) Sensory Deficiencies (i) A witness may be impeached by showing, either on cross examination, or by extrinsic evidence, that his faculties of perception and recollection were so impaired as to make it double that he could have perceived those facts. (d) Reputation or Opinion as to Bad Character for Truthfulness (i) A party may impeach a witness by calling another witness to testify as to the first witness bad character for veracity (e.g. extrinsic evidence okay). (ii) Form of testimony: Reputation or Opinion testimony only. Specific Acts not allowed. (e.g. I think L is a liar, not, L lied to me last week). (iii) Confrontation of witness not required. (iv) Note: when Defendant is the witness, he has roles of both D and W (e) Criminal Convictions Crimes of Dishonesty: Felonies (not having to do with honesty): Misdemeanors (not having to do with honesty): Arizona Convictions: Always Admissible if < 10 years old If < 10 years at judges discretion Not admissible Judges Discretion

(i) If >10: Balancing Probative Value and Unfair Prejudice Factors that make conviction probative: Seriousness Relation to trust and deception Factors that make conviction unfairly prejudicial: Inflammatory nature Similarity to the currently charged offense (ii) Crimes of Dishonesty: (uttering of false words which was element of crime of conviction) Examples: Tax Fraud: yes Shoplifting: No Page | 88 of 153

Lying to Victim: no not part of conviction (iii) Procedural issue: conviction may be proved intrinsically (asking witness) or extrinsically (showing record). Purpose Propensity to commit a particular crime Propensity to commit sexual assault MIMIC Crimes Impeaching a witness character for truthfulness Impeaching a character witness knowledge Admissibility Not admissible Admissible Admissible - crimes of deceit: admissible - felonies: balancing test - misdemeanors: not admissible Admissible, but questions only for impeachment. Rationale Unfairly prejudicial Federal: once a rapist, always a rapist Directly relevant to current charges; not offered for propensity Convictions for crimes of dishonesty or for serious crimes may show that a witness is willing to lie under oath

a)

(f) Prior Bad (Untruthful) Acts (No Convictions) that reflect on character for truthfulness (i) Witness may be asked about prior bad acts if they relate to truthfulness (ii) Limitations Cross-examiner must have good faith to believe bad act happened and is subject to courts discretion May be proved by intrinsic evidence only (no extrinsic evidence permitted) If witness denies bad act, state cannot bring something in to prove they did. (iii) Arrests: by itself, an arrest isnt proof of an underlying act. Not allowed to ask D if arrested for bad act. Can ask about underling act just not the arrest. Okay if Not D: arrests (of any crime) may be used to impeach a witness for the prosecution to show bias (to cut a deal with state), and extrinsic evidence is okay. (g) Contradictory Testimony (i) Witness may be impeached by showing W made mistake or lied during direct (ii) May be proved by extrinsic evidence only if contradiction goes to significant issue or credibility. Otherwise, must be proved only with intrinsic evidence. 3. Rehabilitation of Witnesses (a) Witnesses may only be rehabilitated once credibility has been impeachment (only on cross) (i) Bolstering before witness credibility is attacked is not allowed. Exception: witness prior statements of identification are admissible, even if credibility has not been attacked (because prior ID is more reliable than in-court ID) Note: witness must be subject to cross-exam about the prior ID at trial. (b) Methods of Rehabilitation (i) Evidence of Good Character for Truthfulness: Only when the impeachment showed your witness to be lying, not when they may have been merely mistaken. Reputation or Opinion character witness. Specific acts not allowed. (ii) Prior Consistent Statements May be used to rehabilitate on cross: Prior statement was consistent Opposing party has suggested W has motive to lie (not just general bad character for untruthfulness must be specific charge of motive to lie here). Page | 89 of 153

Prior statement was made before motive arose Admissible to rehabilitate and as substantive evidence (e.g. to prove the truth of the matter assert / hearsay exception).

VI.

Testimonial Privileges A. MBE 1. If federal court action under federal substantive law (e.g. congress, constitution, federal criminal case), apply federal common law privilege law. 2. If federal court action based on diversity, apply state privilege law. (a) Burdens of proof and presumptions (b) Dead Mans Statutes (c) Testimonial Privileges B. Attorney-Client Privilege 1. Relationship: Applies to relationship between attorney and client (or representatives) (a) Attorney: member of the bar, someone client reasonably believes to be an attorney, or agent of an attorney (b) Client: someone seeking legal services or their representative 2. Communication: Covers communications only (a) Doesnt apply to underlying info, preexisting documents or physical evidence (e.g. cell phone not communication with counsel) 3. Confidential: So long as they are confidential (a) Client must reasonably intend confidentiality (e.g. client speaks openly in elevator not reasonably intent confidential) 4. Legal Advice: For the primary purpose of obtaining legal advice 5. Exceptions: Unless the privilege is waived by client, or exception applies (a) Exceptions: (i) Assistance in future crime or fraud (ii) When client puts legal advice at issue (e.g. I didnt intent to do crime I was just following attorneys advice) (iii) Dispute between attorney and client

C.

Doctor-Patient Privilege 1. Elements (a) Applies to relationship between doctor and patient (including nurses) (b) Covers communications or information acquired (c) So long as it is confidential (e.g. 3rd party cant be present) (d) For the purpose of medical treatment 2. Federal courts dont recognize (only applies to psychotherapists) 3. Waived: if patient puts condition at issue (e.g., with personal injury or insanity) Spousal Privileges 1. Spousal Immunity (encourages marital harmony) (a) Federal: (i) In a federal criminal case, W spouse cant be compelled to testify against spouse (including pre-marriage observations). (ii) Applies only to criminal cases (iii) Covers communications (iv) So long as witness and Defendant are married at time of trial (v) May be waived only by the witness spouse. Therefore, witness spouse may voluntarily testify. (b) Arizona: W spouse may not testify against defendant spouse (i) Without consent of D spouse (D spouse holds privilege) Only applies to things that occurred during marriage. 2. Spousal Communications Privilege (encourages communication) (a) Applies to relationship between spouses during time of marriage (at time of communication) (needs to be married at time of communication, but not at time of trial). (b) Covers communications (statements and acts) Page | 90 of 153

D.

(c) So long as they are confidential (e.g., mere observation by one spouse is not a confidential communication). (d) May be waived only by both spouses 3. Exceptions (apply to both) (a) Communications or acts made in furtherance of a future crime or fraud (b) Communications or acts destructive to family unit (e.g., abuse) (c) Arizona: No privilege for any civil actions between the spouses (e.g. divorce, personal injury breach of contract etc).

VII.

Hearsay A. Introduction 1. Definition: Hearsay is an (a) out of court statement (oral or written) (b) by a person (c) offered to prove the truth of the matter asserted (to prove the point of what W said). 2. Purpose: Whether statement is hearsay depends on the purpose for which it is offered.

B.

(a) Non-Hearsay Purposes (i) Impeachment: prior inconsistent statements may be used to show W is inconsistent (ii) Verbal Acts (aka legally operative words): Words with independent legal significance are not hearsay Examples: words of offer, words that make a gift (e.g. this if for your bday) or bribe, words that are themselves an act of perjury or defamation The substantive law attaches legal rights and obligations to certain words because they spoken (e.g. I offer and accept in contracts cases) (iii) Listener Effect: To Show Effect on Person who Heard/Read the Statement (e.g., prior notice of dangerous condition only showing the effect the words have on listener; regardless of truth the listener should act in a certain way.) (iv) State of Mind: Circumstantial Evidence of Speakers State of Mind Examples: statements illustrating insanity, consciousness of guilt, lack of knowledge Hearsay Exclusions 1. Prior Statements of Present Trial Witnesses (a) Witnesss own prior statement is inadmissible hearsay unless exclusion applies. Admissible if: (i) Prior statements of identification (e.g., from lineup) (ii) Prior inconsistent statement if: Made under oath During formal proceeding Arizona: any inconsistent statement (iii) Prior consistent statement if: Used to rehabilitate And made in response to allegation of motive to lie 2. Party Admission an admission is a statement or act that amounts to a prior acknowledgement of a prior act. (a) Any statement made by a party is admissible if offered against that party (i) A form of estoppel you say it, youre stuck with it (b) Vicarious Admissions by Agents/Employees (i) A statement by an agent or employee is admissible against the party if it concerns matters within the scope of the agency/employment and was made during agency/employment. (c) Vicarious Admissions by Co-Conspirators (i) A statement of one co-conspirator is admissible against other co-conspirators if the statement was made during the offence and in furtherance of the conspiracy. Page | 91 of 153

C.

Hearsay Exceptions 1. Exceptions that Require the Unavailability of the Declarant. If exception does not apply, it would violate the Ds right to 6A right to confrontation. (a) Former Testimony (i) Declarant must be unavailable Arizona: Civil Proceeding W does not have to be unavailable. (ii) Covers prior statements given in a proceeding or deposition (iii) Offered against a party who, on prior occasion, that party had an opportunity and similar motive to cross-examine or develop the testimony Grand Jury: proceeding is a secret proceeding, and would not have permitted for cross-examination. Former Testimony Prior Inconsistent Statement When Made Hearing or deposition Proceeding Declarant Unavailable On the stand Prior Statement Opportunity and similar motive to cross-examine Inconsistent with trial testimony

(b) Forfeiture by Wrongdoing (i) Party who intentionally and wrongfully makes declarant unavailable cannot raise hearsay objection to admission of the declarants out-of-court statements (ii) Burden of proof: Federal: preponderance of the evidence (c) Statement Against Interest (i) Declarant must be unavailable (ii) Statement must be against declarants pecuniary ($$), proprietary (property), or penal interest (criminal liability) at the time the person was speaking (iii) Exculpate: In criminal cases, a statement against penal interest used to exculpate a defendant must be supported by corroborating evidence of trustworthiness of statement. Must be Unavailable? Party Admission Statement Against Interest No Declarant? Party to Trial or agent of party Anyone Against? Party When? Vicarious: during agency Was against interest when stmt made Personal Knowledge Required? No.

Yes

Anyone

Yes.

(d) Dying Declaration (i) Declarant must be unavailable (ii) Statement must be made under belief of certain and impending death (iii) Statement must concern the cause or circumstances of impending death. (iv) Federal: applies to any civil case or criminal homicide 2. Exceptions that Rely on Spontaneity to Assure Reliability (unavailability not required) (a) Excited Utterance (i) Statement must be made while the declarant was Still under stress Passage of time From a startling event. Page | 92 of 153

Nature of the event (e.g. drive by vs. executing contract) Verbal clues Exclamatory phrase Excitement oriented verb (shouted, screamed) Exclamation point! (b) Present Sense Impression (i) Statement that describes an event and is made while it is occurring or immediately thereafter. (c) Present State of Mind (Statement of then-existing Mental, Emotional, or Physical Condition) (i) A contemporaneous statement (ii) concerning declarants then-existing physical condition or state of mind (including their intentions) Declaration of Emotion: Doesnt include memory or belief of past condition state of mind while she is speaking (e.g. I dont love you) Declaration of Intent: Statement of declarants intent to do something in the future, including the intent to engage in conduct with another person (e.g. Im going to kill myself). Present Physical Condition: State made to anyone about declarants current physical condition. (e.g. Im feeling a lot of pain in my arm). (d) Statement for Purpose of Medical Treatment or Diagnosis (i) Statement made to medical professional (ii) Concerning present or past symptoms, or general cause of medical condition (iii) Made for the purpose of obtaining treatment or diagnosis. E.g., does not include statements regarding fault or the ID of a wrongdoer (e) Business and Public Records (i) Business Records: Made in the regular course of business (e.g. police department is type of business) The business must regularly keep such records (e.g. police records) They must be made contemporaneously (e.g. at the scene) Must consist of info observed by employees of the business or a statement that falls into other hearsay exception (e.g. police officer) Double Hearsay Exceptions (ii) Public Records All of the above The activities of the office or agency Matters observed pursuant to a duty imposed by law (e.g. weather because records of temp) Findings of fact or opinions resulting from an investigation authorized by law (e.g. OSHA report on safety conditions) Except: police reports may not be offered against Defendant in criminal case. In criminal case want police to come in. Note: police reports okay in Civil Matters. (iii) Proving Records: Foundation may be laid through Live testimony or Affidavit from custodian of records who can establish these elements. Arizona: allowed certification procedure only in civil cases Page | 93 of 153

D.

Impeachment: any impeachment method may be used to attack the credibility of a hearsay declarant whose statement was introduced. Hearsay and the Confrontation Clause 1. The 6th Amendment requires that the Defendant be confronted with witnesses against him. The prosecution may not offer testimonial evidence in violation of this right. 2. The right to confront the declarant is satisfied if the Defendant: (a) Already had a change to cross-examine (former testimony exception) (b) Declarant can cross-examine declarant in court (prior statement of trial W) (c) If the Defendant has forfeited confrontation right - forfeiture by wrongdoing 3. Statements are testimonial if the primary purpose of the questioning is to establish or prove past events potentially relevant to later criminal prosecution. (a) Includes grand jury testimony and police reports (b) Non-testimonial if the purpose is to enable police assistance to meet an ongoing emergency (e.g., 911 calls)

E.

VIII.

Dividing Responsibility between Judge and Jury A. The jury decides questions of conditional relevance: 1. Whether a W has personal knowledge 2. Whether an exhibit is authentic 3. Whether the Defendant is in fact the person who committed a prior bad act (MIMIC) 4. The judge must ensure there is sufficient evidence for a reasonable jury to conclude the conditional fact is true B. The judge decides issues of admissibility by a preponderance of evidence (may use anything) 1. Whether testimony is hearsay 2. Whether communication is privileged 3. Whether expert is qualified

Page | 94 of 153

Real Property Estate Fee Simple Absolute Fee Tail Language To A and his heirs To A To A and the heirs of his body To A so long as To A until To A while To A, but if X happens, grantor reserves right to reenter and retake. To A, but if X happens, then to B To A for Life. To A for the life of B Duration Absolute ownership, potentially infinite As long as there are lineal descendants of grantee Potentially infinite, as long as event doesnt happen. Potentially infinite, as long as condition isnt breached, and then, until holder of right of entry exercises termination. Potentially infinite, as long as contingency doesnt occur. Measured by life of transferee or someone else (pur autre vie) Transferability Devisible, descendible, alienable Passes automatically to grantees lineal descendants. Devisible, descendible, alienable, subject to condition. Devisible, descendible, alienable, subject to condition. Devisible, descendible, alienable, subject to condition. Devisible, descendible, alienable, if pur autre vie and measuring life still alive. Future Interest None. Reversion (if held by O) Remainder (if held by 3d party) Possibility of reverter (held by O) Right of entry/power of termination (held by O)

Defeasible Fees: Fee Simple Determinable Fee simple subject to condition subsequent

Fee simple subject to an executory limitation Life Estate

Executory interest (held by 3d party) Reversion (if held by O) Remainder (if held by 3d party)

I.

Interests In Land Present and Future Interests in Land: 1. Non Estates: not right to possess (a) Easements: right to limited specific activity (b) Profits: right to remove natural resources (same rules as an easement) (c) Covenants: promise by someone who owns the land (d) Rents: rights of landlords (e.g. contractual) 2. Estates: right to possess (a) Freehold (i) Fee Simple: Absolute: forever Defeasible: limited on terms Tail: stays in the family (does not exist in AZ) (ii) Life: ends with life of beneficiary (b) Non Freehold: rights of tenants (i) Fixed Term: definite term (ii) Periodic Term: renews itself (e.g. month to month) (iii) At Will: no time period A. Fee Simple: To A and his/her heirs; largest interest in land possible. Not required today, but still an indicator.

B. Fee Simple Defeasible (FSD): Present interest Typical words (Must Use These) Future Interest (i.e. Interest = Possession) Created in Whom Automatic or Action? Page | 95 of 153

Determinable

Until or So long as Condition or Right to Re-Enter on land Until or So long as Then it goes to

Possession by Possibility of Reverter (aka reversion) Right of Entry/Re-Entry

Grantor

Automatic

On Condition Subsequent Subject to Executory Interest

Grantor

Action

Executory Interest (e.g. created for someone other than grantor)

Not Grantor

Automatic

AZ only finds FSD when words specifically referring to reversion or re-entry are used Someone always has a right to own; thus, when FSD ends, there must be a future interest

C. Adverse Possession of Defeasible Fee Estate: if someone does not take repossession after a fee simple determinable or subject to executory interest (both are automatic); and person with past interest does not leave land then it is an adverse possession. D. Precatory Language: for use as is a fee simple absolute, unless the terms of fee Defeasible is present (e.g. until, so long as, condition, until). for use as is merely precatory language; meaning, it is a recommendation but not legal requirement. E. Applying Rule Against Perpetuities (RAP) to Executory Interest that Follow Fee Simple Defeasible: 1. Cannot be Unlimited: If theres no time limit within which an executory interest must vest or fail, it is void. (a) Ever: Ever sold is void, as it is unlimited (but does not cancel out whole statement, just the executory interest). E.g., to A so long as no liquor is ever sold on the property, and if it is, then to B. A would have a fee simple determinable, because Bs interest is void. (i) Arizona Exception: creates an exception of 500 years to unvested interest (e.g. wait 500 years to see if liquor is ever sold, and if not, then is fee simple). (b) Life Estate: Personally ever is not void; personally means life estate. (c) 21 Years: Vested interest must be limited to 21 years or less. (i) Can tack on fixed time (e.g. 21 years or less) to a life estate; but not visa versa (e.g. As lifetime or within 20 years after As death ok).

F. Fee Tail: To A & heirs of her body/bodily heirs Inheritability limited to lineal heirs. 1. Purpose is to keep land in the family indefinitely 2. Arizona Exception: Not recognized in Arizona; attempt to create one just results in fee simple absolute. G. Life Estate: length of land ownership interest is measured by life/lives of person(s) 1. Can have life estate for the life (period) of another e.g. To A for the life of B. 2. A for life then A conveys her interest to B. B gets life estate of A. H. Waste: life tenant entitled to ordinary use of profits of land, but cant injure interests of remainderman or reversioner 1. Remedies: can sue for damages or injunction [equitable relief] 2. Affirmative (Voluntary): Exploitation of natural resources by life tenant is limited to where (a) necessary for repair/maintenance of land; (b) land is suitable only for such use; or (c) expressly/impliedly permitted by grantor (i) Open Mines Doctrine: if mining done on land prior to life estate, l/t can continue to mine, but is limited to mines already open 3. Permissive: Life tenant fails to protect/preserve land. Life tenants obligated to (a) preserve land and structures in reasonable state of repair Page | 96 of 153

(i) Life tenant is NOT obligated to insure premises for benefit of remaindermen and
isnt responsible for damages caused by 3rd party tortfeasor

(b) pay interest on mortgages; (i) Mortgages: Life tenant must pay interest; future interest must pay principle (c) pay ordinary taxes on land; AND (i) Taxes: life tenant must pay (up to propertys rental value) (d) pay special assessments for public improvements of short duration
Ameliorative: change that benefits property economically. (a) Life tenant may alter (even demolish) existing buildings if: (i) Market value of future interests isnt diminished; and EITHER: Remaindermen dont object; OR Substantial permanent change in neighborhood conditions has deprived property in current form of reasonable productivity/usefulness Future Interests 1. Grantor has future interest of: (RAP does not apply) (a) Possibility of Reverter: follows simple determinable. Grantor has future interest (b) Right of Entry: follows simple on condition subsequent. Grantor has future interest (c) Reversion: follows any other interest thats of lesser duration than grantor owns, the grantor has future interest. 2. Someone (other than the grantor) has future interest of: (a) Remainder: older type; can only exist if certain rules are met. (b) Executory interest: catch-all; any future interest created in person other than grantor, which doesnt meet rules for remainders 4.

I.

J.

Remainder: future interest in 3rd person that can become possessory on natural expiration of preceding estate. 1. Creation (a) Same Time: Must be created at same time and in same instrument as prior estate (i) Remainder: To A for life, then to B vs. (ii) Reversion: To A for life then later, Grantor conveys her reversion to B. (b) Life Estate: Prior estate must be life estate(s) (c) No Cut: Doesnt cut short (divest) the prior estate(s) (e.g. To A for life, but if A divorces, to B is an executory interest no remainder). (i) Look to A, not B. If B, then it is a contingent remainder. (d) No Gap: There cannot be a built-in time gap between prior estate and future interest (e.g. it would be an executory interest not remainder if said to A for life, an one year after As death, to B) 2. Two Types: (a) Vested (RAP does not apply, unless to a class) (i) Indefeasibly Vested (close class): created in existing and ascertained person and not subject to condition precedent; not subject to divestment or diminution. Class is closed with life tenant dies. This is default, unless testator stated for class to remain open. (ii) Vested Remainder subject to open: created in class thats certain to become possessory; subject to diminution (by birth of additional people) (iii) Vested Remainder subject to total divestment: subject to a condition subsequent (b) Contingent: interest is contingent if either (i) Takers unascertainable; (e.g., unborn or heirs unknown yet) OR (ii) Theres an expressed condition precedent (e.g. if and when B passes the bar).

K. Executory Interests 1. Shifting (2 grantees present and future) to A untiland then to B 2. Springing (1 future interest) to A, to take possession at some future date/event

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3.

Arizona: statutory beneficiary deed is similar to springing executory interest; future interest vests in the beneficiary upon grantors death. However, grantor can revoke the deed by recording notice in county recorders office before death. (no other way of revoking will work)

L. Rule Against Perpetuities: No interest in property is valid unless it must vest, if at all, not later than 21 years after some life in being. 1. Applies only to (CROCE): (a) Contingent remainders; (i) Arizona: has statutory wait and see rule even if common law version of rule would make contingent remainder void, will be VALID if it actually vests within 500 years (b) Rights of 1st refusal to buy land (i.e. in the future I get an offer to buy the land, and I am willing to sell the land, I will contact you first and give you first dibs); (c) Options to buy land (i.e. offer to sell land and the offer is left open); (i) Arizona: lease with option to buy executed with no time limit, is exercisable for a reasonable amount of time. Thus, RAP doesnt apply and lease with option is permitted and valid (d) Class gifts, even if vested; (e) Executory interests 2. Charities Rule: RAP doesnt apply when all interests go to charities II. Restraints on Alienation: Provision preventing owner from transferring land interest A. Generally void when: 1. Forfeiture: attempted transfer forfeits the interest; 2. Promissory: attempted transfer breaches a covenant between grantor and grantee; 3. Disabling: attempted transfers are ineffective (just wont work) (never valid) B. Arizona: all future interests are fully alienable, both by deed, and by will C. Valid restraints on alienation 1. Forfeiture and promissory restraints is less than fee simple (e.g. life estates or leaseholds) 2. Forfeiture and promissory restraints only is a limit in time and persons effected (to A, but A agrees not to transfer within 2 years). 3. Forfeiture and promissory restraints has a reasonable purpose. 4. Forfeiture and promissory restraint is for charitable use. III. Trusts A. Parties 1. Trustor creates trust and transfers property (res, or corpus) into it 2. Trustee holds title to the trust property and administers the trust 3. Beneficiaries receive distributions of profits and property from the trust B. Creation 1. Trustor may create trust by (a) Deeding corpus to trustee; (b) Declaring themselves to be a trustee; (c) Testamentary Trust: leaving property by will to trustee testamentary trust; OR (d) Pour Over: establishing the trust during life and then pouring over additional corpus into it by will 2. Trust may be private or charitable (a) Private beneficiaries must be identifiable by time their beneficial interest can be enjoyed (class gifts OK) (b) Charitable must have group of beneficiaries who are reasonably numerous and not individually identified 3. May include both real and personal property, may be present or future interests. (a) RAP applies to beneficial trusts, but not to charity trusts. 4. Normally, a beneficiary can transfer their beneficial interest in trust (by deed, will, or intestate succession). However, trust may contain a spendthrift clause prohibiting transfer (upheld even though disabling restraint on alienation) IV. Concurrent Ownership A. Presume tenancy in common is intended unless grantor states its a joint tenancy with right of survivorship. 1. Arizona: word survivorship must be used Page | 98 of 153

B. Tenancy by the Entirety 1. Marital estate akin to JTROS. Arises presumptively in any conveyance to husband and wife. Only death, divorce, mutual agreement, or execution by joint creditor of both can sever. A deed or mortgage of such property by one spouse is ineffective 2. Arizona: does NOT recognize common law tenancy by entirety estate C. Tenancy in Common (TC) 1. Concurrent estate w/NO right of survivorship. Ownership shares based on contribution of parties, unless they agree to contrary. Interests alienable, devisable, and inheritable. (a) Note: that if there is a dispute of TCs, the courts will favor partitioning that land into separate tracks. D. Joint Tenancy With Right of Survivorship (JTROS): 1. Creation requires unity. Unities: (a) of time (e.g. must get it a the same time), (b) title (e.g. must get it through the same document), (c) interest (e.g. must take equal shares), and (d) possession (e.g. all must have access to the land and the fruits thereof) required for valid JTROS (i) Lack of unity results in TC. (ii) Remedy: Straw man can be use if current property owner wants to change property interest to become a JTROS with another party otherwise lack of time and title AZ straw man is unnecessary Owner can give JTROS to self and other directly E. Severance: occurs when a conveyance of JT interest to outsider converts interest into TC 1. Mortgages: when does a signing of a mortgage by one JT sever the JTROS into a TC? (a) Tile Theory: Mortgage will sever a JT in title theory state (e.g. mortgage valid to interest of land as now TC) (b) AZ is lien theory state - mortgage execution/delivery will NOT be severance (e.g. therefore, if mortgagee dies, other JT is not left with mortgage on the others half). (i) Judgment lien does NOT sever JT, until its actually sold at foreclosure sale 2. Lease: Entering a valid lease does NOT likely sever a JT (T signed lease with A. A dies, B can have T move out). 3. Slayer Statutes: If one JT murders the other, some states (including Arizona) deem JT severed, and murderer is now TC. Others deem killer to have died first; all property interest goes to victims survivors. F. Rights and Duties of Co-Tenants (Applies to both TC and JTROS) 1. Possession: each co-tenant has right to possess all portions of property, but has no right to exclusive possession of any part. Cant bring possessory action unless ousted 2. Ouster (a) Ousting party owes ousted party fair rental value of house (b) Ousting party loses right to make ousted party pay for repairs and other expenses (c) Statute of Limitations of Adverse Possession begins running against ousted party at moment of ousting 3. Rents and Profits: In most states each co-tenant in possession has right to retain profits from their own use of property (i.e., need not share w/other co-tenants, absent ouster or agreement to contrary) (a) Must share net rents from 3rd parties (not rent for own occupancy) and net profits gained from exploitations of land 4. All parties are equally responsible for: (a) Preservation: price of repairs, property taxes, mortgage payments, and insurance (ANY reasonable expenditure to preserve or maintain). (i) Repairs must be necessary and co-tenant seeking contribution must notify others of need for repairs (b) Improvements do not induce contribution, unless partition is necessary to preserve the property. 5. Encumbrances: JT or TC may encumber own interest, not interests of co-tenants (if one tenant mortgages their interest, ME can foreclose on that co-tenants interest only) 6. Partition (e.g. like divorce): (a) Any co-tenant has right to judicial partition, either Page | 99 of 153

(i) in kind (physical division), or (ii) by sale and division of proceeds. (b) Restraints on partition by co-tenants are valid, provided theyre limited to a reasonable time. (c) A partition includes an accounting if requesting. (i) No statute of limitations on this. (d) If all parties agree, then no partition required. 7. Duty of Fair Dealing: confidential relationship exists among co-tenants (a) Ex: arises when one of the cotenants buys the entire property at a forced sale for a bargained price. V. Landlord (L) Tenant (T) Law A. Nature of Leasehold 1. Tenancy for Years (fixed term) (a) Creation: usually by written lease. Under statute of frauds, writing is required if lease is greater than 1 year. (b) Termination: automatic upon termination date. (c) Breach of Covenants: in most leases, L reserves right of entry, allowing them to terminate lease if T breaches any of leases covenants (d) Failure to Pay Rent: many jurisdictions allow L to term lease upon Ts failure to pay promised rent, even in absence of reserved right of entry (e) Surrender: lease may also term if T surrenders tenancy and L accepts 2. Periodic Tenancies: continues for successive periods until either party gives proper notice to terminate (a) Creation by: (i) Express agreement month to month lease; (ii) Implication (e.g. it is the default if T is paying $100 per month); OR (iii) Operation of Law: T remains in possession after lease ends; L treats as periodic tenancy (b) Termination: lease is automatically renewed until proper notice of termination is given. (i) Common Law Notice: Usually, notice must be one full period in advance and timed to terminate at end of a period (except for a year-to-year lease, only 6 months notice is required). Notice must cause a termination at the end of a regular lease period (e.g. month) (ii) Arizona Notice: Residential (LIFE TENANT Act) Week to Week 10 days (AZ) Month to Month 1 Month (common law) Non Residential Week to Week 1 Week (common law) Month to Month 10 days (AZ) 3. Tenancies at Will: no definite term or regular rents; terminable at will of L or T (a) Creation: generally must be express agreement that lease can be terminated any time (otherwise will be ruled a periodic tenancy). (i) If only L has right to terminate, court will imply periodic tenancy in favor of T (ii) If only T has right to terminate, court will NOT imply periodic tenancy (b) Termination: May be terminated without notice by any party with power; or by operation of law B. Landlords Liability and Duties: the general rule is caveat emptor (no landlord liability.) There are six exceptions: 1. Latent Defects (concealed dangerous conditions): L liable if knows or has reason to know of defect; L must disclose, not repair defect (otherwise liable for injuries). Not difficult to prove, as landlord has duty to inspect before renting property. 2. Common Area Defects: L has duty of reasonable care in maintaining common areas (duty of reasonable care in repairing also applies) 3. Furnished Short-Term Residence: L under strict duty liable for injuries resulting from any defect (regardless of knowledge) 4. Public Use: L liable for injuries to public if, at time of lease, he (a) Know or should have known of dangerous condition; Page | 100 of 153

(b) has reason to believe L may admit public before repairing condition; and (c) fails to repair. 5. Promise (and Bargain) to Repair: L not liable for injuries from dangerous conditions arising after T takes possession; BUT, if L promises to repair, L is liable because L made a contract to repair. 6. Negligence: L not liable for injuries from dangerous conditions arising after T takes possession; BUT, if L tries to repair he owes duty of reasonable care (negligent repair). (a) Duty of Reasonable Care (Modern Trend): Many courts hold L to general duty of care toward residential Ts, and liable for injuries from ordinary negligence if L had notice of defect and opportunity to repair (regardless of whether other situations are present) (b) Arizona: L liable for general negligence in reasonable care. However, not liable is T had a reasonable opportunity to discover it. (c) Statutory Duties: Ls are liable to Ts for breach of statutory duties, even if it is a city housing code (e.g. duty to maintain locks) Note: Can L eliminate liability through contract? Likely no. In Arizona, the residential landlord tenant act, such a waiver is not enforceable. However, AZ remains silent on a commercial waiver as of yet. C. Implied Covenant of Quiet Enjoyment: This applies beyond residential property to all rented properties. Every lease of every type is deemed to contain covenant that: 1. L must not directly interference with Ts possession 2. L must be a paramount title holder to Ts property 3. L has a duty to remove previous tenants (a) Express Provisions of Lease: L must put T in actual possession of premises at beginning of leasehold term (L breaches if hasnt evicted hold-over tenant) 4. Partial Actual Eviction: failure to give T possession of entire property; T will be relieved of rent obligation for entire premises, even though T possesses remainder (e.g. T remains rent free until T gets access to entire property) 5. Constructive Eviction: (a) Requirements: (i) conditions are very bad; (ii) conditions must result from act or omission of an act L; (iii) T must move out D. Implied Warranty of Habitability: Applies only to residential property. L breached a material violation of local housing code. 1. T must give L notice of breach and reasonable time to cure. AZ time to cure is statutorily defined: (a) Breach of Covenant in Lease: 10 days; (b) Breach of house code or LIFE TENANT Act Affecting Health or Safety: 5 days 2. Remedies available to T: (a) Terminate lease and move out; (b) Abatement of rent (e.g. go to court and ask just to reduce rent); (c) Damages for breach of warranty; (i) E.g. can even get damages for mental distress (d) Repair and deduct from next months rent (i) Arizona: T is limited to greater of $300 or month rent for repairs deduction 3. Cannot Get: Specific Performance generally NOT available remedy for T E. Termination of Leases 1. Release: T purchases Ls interest (rents and reversions). The rents and reversion merge with Ts leasehold giving T a fee simple absolute. 2. Surrender: L accepts Ts offer to convey the leasehold to L. The leasehold merges with Ls rents and reversion interests giving L a fee simple absolute. 3. Abandonment: L refuses to accept Ts offer to move out, and T vacates the premises, ceasing to pay rent. (a) Remedy: If T unjustifiably abandons property, majority view is that L has duty to mitigate damages by seeking to relet. (b) Reletting: T is liable for difference between promised rent and fair rental value of property (if relet: difference between promised rent and rent received in new lease). L may also recover damages for releasing. (c) L may recover sum immediately as a contract breach, but must discount Ts liability to present value because L is getting it early. Page | 101 of 153

4. Option to Terminate: T may terminate lease is property is destroyed. (a) Minority and Arizona: allows T to terminate if T is leasing the entire parcel of real estate in addition to just the building which was destroyed. (b) L is not obligated to rebuild the property. 5. Arizona (Minority): either party to lease can terminate if other party commits a material breach (i.e., covenants in the lease are dependent, not independent as is typical) 6. Arizona: if T is victim of domestic abuse, she can terminate lease, or force L to change the locks. F. Hold-Over Tenants: if T does not move out when lease expires, L can do one of two things: 1. Evict Forcible Entry and Detainer (see below) 2. New Periodic Tenant: Bind T to new periodic tenancy. (a) Terms and conditions of expired lease governs new, UNLESS L notifies T before lease expires that continued occupancy will be at increased rent. T, by holding over, is held to have acquiesced to new terms (even if T actually objected) (b) Arizona: all month to month, except weekly residential roomers become week to week (c) Except if: T remains only a few hours, or leaves a few items of property and the delay isnt Ts fault (e.g., severe illness) or was a seasonal leases G. Self-Help Eviction: If Ts residential lease expired and T didnt move out, L CANNOT change the locks and put Ts possessions on sidewalk (majority and AZ view) if so, Ls liable for forcible entry. 1. Arizona: does permit self-help eviction in non-residential leases H. Assignments and Subleases: absent express restrictions in lease, T may freely transfer leasehold interest, in whole or in part. 1. Assignment: A complete transfer of entire remaining term. 2. Sublease: If T retains any part of remaining term. 3. Consent: Need Ls consent for T to make assignment or sublease, only if lease says so. However, usually need consent for sublet. No requirement that L be reasonable in withholding consent. (a) Arizona Exception: AZ requires that L has commercially reasonable reason for withholding consent from T to enter into either assignment or sublease agreement (e.g. new T doesnt want to pay rent increase is not reasonable). (i) Reasonable Reasons to Reject Consent: Poor credit rating T Mix: new Ts business is not compatible with current compatible 4. Transfer in Violation of Lease: if T assigns/sublets in violation of lease provision, transfer is NOT void and is effective. But, it is a breach of lease and L may sue for damages (if provable) or terminate lease. 5. Covenants (made by original T like to pay rent repair and maintain, etc): (a) Will be binding on new T if original parties so intend & covenant touches and concerns land (b) Assignee: stands in shoes of original T (i.e., assignee and L in privity of estate); both new T and old T are each liable to other for all lease covenants that run with land. (i) If new T assigns to another new T, then new T1 no longer has liability unless it has assumed the covenant to pay rent. (ii) Waiver of Consent: valid covenant against assignment is considered waived if L was aware of assignment and didnt object. (c) Sublease: assignee owes rent directly to L. However, original T remains liable on original K obligation to pay rent, unless expressly released. New T is generally not liable, since new T does not have the full estate with which the covenant to pay rent runs, unless sublessee expressly assumes covenant. (i) Ls Remedies: L may terminate main lease for nonpayment or breach of other covenants if lease so states or statute permits. Sublease automatically ends with lease. (ii) Sublessee cant enforce covenants made by L in main lease, except a residential sub-lessee may enforce implied warranty of habitability against L. (d) Arizona Exception: In AZ ANY person in possession (assignee or sublessee) is liable for their share of rent I. Assignment by Landlords: L may assign rents and reversion interests; usually done by deed when L conveys building to new owner. Ts consent NOT required

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1. Attorn: Benefit of the rent covenant runs with Ls estate. Once Ts given reasonable notice of assignment, must recognize and pay rent to new owner as L. 2. New L must maintain property and pay taxes. New L assumes the covenants that touch and concern runs with Ls estate to assignee; thus, assignees liable for performance of those covenants and L remains liable on all covenants made in the lease. (a) Except: Security Deposit only the original L has covenant to return the security deposit. (b) Under AZ LIFE TENANT Act: if L sells property in good faith, L is no longer liable for any breaches of law of lease covenants, except covenant to refund security deposit is if L1 actually got the money. VI. Rights in Lands of Another Easements: A right to do something on anothers land, ex: cross to get to beach Appurtenant or Gross A promise to refrain from doing something on ones own land, ex: blocking view Covenants: A promise to do something on ones own land Privity Touch and Concern Equitable Servitudes: A promise to do something on ones own land, but will be enforced for sake of equity. Who is appropriate to enforce it? Touch and Concern A. Easements 1. Essay: (a) An easement is a nonpossessory interest in land giving the holder the right to use land possessed by someone else. (b) an affirmative easement gives the holder the right to enter and make use of the serviant estate. (c) An easement is appurtenant when it benefits the holder in the use and enjoyment of a servient estate. 2. Definition: Holder has right to use anothers land for special purpose, but has NO right to possess or enjoy that land. Presumed to be of perpetual duration, unless grant specifically limits the interest. (a) Grant: deed which grants easement 3. To determine an easement, must know (1) is it a easement or possessory estate, (2) location, (3) scope, (4) duration (if you dont say how long it will last, then it is a fee simple) 4. A profit a prendre: similar to an easement, except it allows the hold to extract some natural resource from the land. 5. Easement Can be Either Appurtenant or In Gross: (a) Easement in Appurtenant: (Benefits Land) (i) There must be both a Dominant: land benefited by physical use or enjoyment of easement Servient: land burdened by easement (land it goes across) (ii) Transferability: Passes with transfer of benefited land, whether mentioned in conveyance or not; Burden of easement also passes automatically with servient estate UNLESS: New owner is bona fide purchaser with NO notice [visible (e.g. obvious), actual (e.g. told) or constructive (e.g. recorded)] of easement Cant be conveyed apart from dominant/benefited land, unless its conveyed to owner of servient/burdened land to extinguish the easement

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(b) Easement in Gross: (Benefits Person) right to use servient land independent of possession of another tract of land (i.e., easement benefits holder themselves, rather than another parcel) (i) Transferability: For holders personal pleasure NOT transferable To serve an economic or commercial interest IS transferable 6. Easement Can be Either Affirmative or Negative: (a) Affirmative: holder entitled to make affirmative use of servient land (b) Negative (aka Restrictive Covenant): entitles holder to compel possessor of servient land to refrain from engaging in activity on servient estate. 4 types: (1) Light; (2) Air; (3) Support lateral and subjacent; (4) Stream flow of artificial stream 7. Creation of Easements [PINE] discuss all methods: (a) Prescriptive: analogous to acquiring by adverse possession. (i) You CAN prescribe an affirmative easement, but you cant prescribe a negative easement (ii) Must prove there has been [CONNNN] Continuous and uninterrupted regular use For the statutory period of time (Arizona: 10 years) Open and notorious (i.e., discoverable upon inspection) Non permissive (aka Hostile / Adverse) Arizona Exception: if wild, unfenced and vacant land, then permission is assumed, and cannot get prescriptive easement. Need not be Exclusive Need not be Necessary Not acquirable in public land. (iii) Preventing Easement: Physically block off the path (for AP period); Bring action for injunction (before AP period runs); Give trespasser a license and have it acknowledge (to prevent AP period from running) (b) Implied Grant and Reservation (exception to statute of frauds) (i) Implied by Operation of Law (ii) Implied from Existing Use: May be implied if Common Ownership: Prior to division of single tract there was common ownership Quasi Easement: continuous tangible use of easement before lots were split on servient part (e.g. cannot have implied easement on the basis of a view). Exception: easements may be implied w/out preexisting use 1) Subdivision Plan lots sold in subdivision w/reference to recorded plat/map also shows streets leading to lots; buyers of lots have implied easements to use streets to access their lots; 2) Profit a Prendre holder has implied easement to pass over surface of land and use it as reasonably necessary to extract product Visible: Use is apparent and visible Necessary: Reasonably necessary for use and enjoyment of dominant part Court determines that parties intended use to continue after division of land (c) Necessity: arises when owner sells portion of tract and division deprives one lot of access to public road or utility line. Servient land owner has right to locate easement (i) Must prove: Common Ownership: Prior to division of single tract there was common ownership Page | 104 of 153

Land Locked: there is no surface access to dominant land. (ii) Purpose: for access and utility lines. (iii) If there is more than one method of the servient land which would suffice for an easement by necessity, the servient may choose a preferred route. (iv) Arizona: Easement must be on land grantor still owns and has not sold off Allows landlocked owner to condemn easement of necessity if common law type is unavailable. Available on showing of reasonable necessity (would likely have to pay for, while absolute necessity easements are free). (d) Express Grant and Reservation: (i) Grant: Any easement for more than one year must be in writing and signed by the holder of the servient tenement, as required by the statute of frauds. An express grant of an easement must comply with all formalities of a deed (e.g. act and delivery). (ii) Reservation: grantor conveys title to land, but reserves right to continue to use tract for special purpose. Can be reserved ONLY for grantor attempt to reserve easement for anyone else is VOID (iii) The default for an express easement is that it will be perpetual in duration. 8. Rights and Duties of Easement Holder (a) Change of Use: A reasonable change in easement does not terminate easement (e.g. change in technology ok, but adding transmission line not ok) (b) Overuse or Misuse: misuse of easement doesnt terminate the easement. Appropriate remedy for servient owner is injunction or damages for misuse. (c) Adding or Dividing Land: cannot add additional dominant land to use of easement. Only original dominant land ok. If dominant divides up property, new uses may use easement is reasonable. (d) Use by Servient: if the easements owner is the only person allowed to use the easement pathway, the easement is exclusive. If the servient landowner is also allowed to use it, it is nonexclusive. Easements are presumed to be non exclusive (exception: trail road tracks are presumed exclusive). (i) Servient owner may use land in any way they wish, as long conduct doesnt interfere with performance of easement. (e) Repairs: easement holder has duty to make repairs to easement if sole user; if both parties use easement, court will equitably apportion repair costs based on use. 9. Termination of Easement: (a) Merger: if same person acquires ownership of benefited and burdened estates, they merge and destroy easement (NOT revivable) Meaning, you cant have an easement on your own land. (b) Release: by deed of release from owner of easement to owner servient estate. SOF applies. (c) Estoppel: reasonable detrimental reliance (which satisfies the SOF). Intent to abandon doesnt terminate unless in writing or accompanied by action. BUT, if owner changes position in reasonable reliance on representations made or conduct by easement owner, easement terminates through estoppel. (d) Abandonment: holder demonstrated by physical action an intent to permanently abandon the easement. (i) Requires long period of non use (e.g. 10 years) and evidence of intent by easement owner. (ii) Can abandon and easement, but not an estate. (e) Adverse Possession/ Prescription: must be an adverse, continuous interruption of use for prescriptive period (AZ 10 years) (i) Arizona: cannot terminate an easement by adverse possession unless the person owning the easement is actively trying to use it. (f) Necessity: as soon as necessity ends the easement ends (g) Express Conditions: grant may specify when or under what conditions easement terms (h) Destruction and Condemnation: condemnation of servient estate extinguishes all easements (court split re: compensation for dominant land). Involuntary destruction extinguishes easement; voluntary destruction does NOT extinguish easement B. Licenses 1. Permission to Occupy: Easement is interest in land, while license is merely permission to occupy land. Page | 105 of 153

(a) Privileges holder to go upon land of another. Not an interest in land, but privilege revocable at will of licensor. Personal to licensee, thus inalienable any attempt to transfer result in revocation by operation of law (b) Mere benefit, not right to property. 5A compensation applies to easement and not licenses. 2. Creation: Statute of Frauds does not apply, can be made orally. 3. Interference: while with and easement you can get damages and injunction for interference, with a license the most you can get is damages. No right to property. 4. Revocability and License Estoppel: a license is generally always revocable. However, if licensee invests substantial amounts of money or labor in reliance on license, licensor is estopped to revoke. Lasts until holder receives sufficient benefit to reimburse for expenditures. (a) If there is reasonable reliance, and person is not sure whether it was a license or easement, it will look towards what the presumption of what the reasonable reliance was on. C. Covenants Running with the Land (Real Covenants): Real covenant is a written promise to do something on the land, or a promise not to do something on land. Runs with land at law (i.e., subsequent owners may enforce or be burdened by covenant). 1. Easement vs. Covenant (a) Easement: Agreement that one party can do something on another persons land. (b) Covenant: An agreement that one party will not do something on their own land for the benefit of a neighboring land/party. 2. Requirements: (a) Writing: must be in writing (SOF applies) (b) Consideration: at time promisor entered into covenant with promisee, there must have been some shared interest in land independent of covenant (e.g., grantor-grantee) (c) Notice: modern recording acts state subsequent purchaser must have actual, inquiry, or record notice of arrangement at time of purchase (only protects BFP) (d) Bind and Benefit: Covenanting parties mustve intended that successor (future owner) be bound by terms; inferred from circumstances surrounding creation of covenant and express language 3. Rules for Covenants Running with the Land: At Law (damages sought): Touch and concern the land Intended to run Horizontal privity of estate required only to make the burden run. Notice to the burdened party is generally required by the recording act; a BFP will take free of the burden of the covenant. In Equity (injunction sought): Touch and concern the land Intended to run Privity not required Notice to the burdened party required.

4. Horizontal Privity (a) Means either the original covenant is: (i) In a deed of one of the parcels of land; or (ii) Relates to an easement that one of the parties has on the others land. (b) Only need horizontal privity to make the burden transfer with the burdened land. 5. Subdivisions: common plan or when (1) the lots are clustered together, (2) about the same size and (3) have similar covenants. (a) Every lot in the common plan is considered benefited land with respect to the covenants of all the other lots of the plan. (b) The developer may enforce the covenants if he still owns a lot. (c) Buyers can enforce against everyone else regardless of order of sale. (d) Reciprocal Negative Easements: covenants can be enforced against land that if it is (1) part of the common plan, and (2) notice of the covenants. A common scheme may be evidenced by a general pattern of prior restrictions. If there is no actual notice (deed without covenants), it can still be upheld because of the appearance of the neighborhood gives constructive notice. 6. Termination of Covenants: Page | 106 of 153

(a) Merger: you cant have covenant rights against your own land (same person owns all the land). (b) Waived or Released: express waiver (c) Implied Waiver: implied by laches (unreasonable delay in asserting equitable remedies), prescription or abandonment. (d) Unclean Hands: if a party breaches the covenant, they cant sue to enforce the covenant on other lots. (e) Changed Neighborhood Conditions: A defense to the enforcement of a covenant is changed neighborhood conditions, but the change must be within the subdivision. VII. Adverse Possession: A. Elements [OCEAN]: You must have (in Arizona for 10 years) 1. Open and Notorious (possession must be visible, but true owner need not know of it) 2. Continuous (no long gaps; must use the land in the time the natural owners would use it, e.g. seasonal okay) (a) Note: that AP statutory period may also be stated as owner did not bring ejectment action for trespass on real property within the statute of limitations. 3. Exclusive (true owner must not be in possession of the land, but its okay to have other AP competing for the land) 4. Actual (must make use of the land in the way the natural owner would use it, e.g. if its a house you must life in it). 5. Non-Permissive or Hostile (the owner must not let you live in it; however, intent of the AP does not matter you can believe its your own land it only matters that the true owner would not allow you to be there). (a) Is not hostile if: A party cannot adversely possess the land of infants, the insane or the imprisoned. The condition has to exist the day the adverse possessor moves on to the land. B. Constructive Adverse Possession: When adversely possessing a small part of a large tract of land, the entire tract will be the adverse possessors if: 1. It is one parcel in the public records; 2. The adverse possessor has color of title (ex: invalid deed) 3. The adverse possessor actually possesses part of the tract. (a) Arizona: Adverse possession is limited to 160 acres, unless adverse possessor has color of title. C. Exceptions: 1. Future Transfers Effect on AP: (a) Sale: nothing the true owner does with the land has an effect on the AP. If land is sold, the SOL for AP does not restart with the sale of the land. (b) Life Estate: A party, who adversely possesses a life estate, loses their interest when the person dies. (c) Mortgages: If a party adversely possesses land subject to a mortgage, the adverse possessor owns the land subject to the mortgage. The adverse possession period does not begin to run against the bank until the mortgage is foreclosed and then meets the the AP period. 2. Government Land: Government land cannot be acquired by adverse possession. 3. Severed Mineral Estates: Adverse possession only gives the possessor rights to the surface estate, not the mineral rights. Must extract the minerals to AP that as well. (a) Exception: if the owner of the land separated the surface and the subsurface estate subsequent to the AP coming along, the AP gets it all. 4. Privity between A.P.: Privity between adverse possessors exists if the land was transferred by will, deed or orally. AP gives property to another AP. 5. Tacking: a person may lease land and count that time towards their adverse possession period (T pays AP L; Ts possession is attributed to AP L). 6. Relation back: Once a party acquires land by adverse possession, there is no liability for trespass or mean profits.
Deed: tangible object Title: not tangible object laws conclusion about who owns a property

VIII.

Recording Acts: burden on subsequent taker to prove they qualify for protection under statute A. First in Time: of the recording statute doesnt apply because neither is without notice, and no one records, then the first in time with interest wins. B. Notice: In a notice State, a party is the first to bonafide purchaser without actual or constructive notice of prior purchaser (Arizona) Page | 107 of 153

1. in good faith 2. value and without notice C. Race: In a race State, a party must record first. (No BFP requirement.) 1. records first (look for first) D. Notice-Race: In a notice-race State, must be a BFP and first to record. 1. value and without notice who records first (must say record first) E. BFP: Bonafide Purchaser: must (1) pay value, (2) no notice 1. Recording act Only saves against other previous documented interests (e.g. adverse possession, easements and etc will still win). 2. Value: (a) BFP must pay substantial value in relation to the property value wont win in a Notice jurisdiction (e.g. cant be gift or donee, heir, and devisee). Can be mortgagee. (i) Purchaser from donee, heir, or devisee are protected against prior unrecorded conveyances of record owner (ii) Earnest fee (e.g. $50) is nominal and not of substantial value. (b) Judgment Creditors: most states permit P with money judgment to place judgment lien on Ds property by filing judgment in county office. Typically such judgment creditor isnt protect by recording statute against prior unrecorded conveyance by D (i) Arizona: judgment lien prevails over and unrecorded deed (c) (Shelter Rule) Transferees from BFP Person who takes from BFP will prevail against any interest the transferor BFP would have prevailed against (even if transferee had actual notice of prior unrecorded conveyance). (d) Purchaser under Installment Land K: protected only to extent of payment made. In dispute w/prior claimant, court may award purchaser 1) share of property as t/c equal to proportion of payments made; 2) lien on property to extent of amount paid; 3) entire property, subject to lien on property to extent of balance still owed 3. Notice (a) Actual notice had some source of info that title was not good (i) Purchaser has duty to look and inquire at chain of title. (b) Record Notice (chain of title) subsequent purchaser has notice of only those conveyances that are recorded and appear in chain of title (i) Wild Deeds: recorded deed thats not connected to chain of title. NOT considered constructive notice b/c couldnt feasibly be found (ii) Deeds Recorded Late: Deed recorded after grantor is shown by record to have parted w/title through another instrument isnt constructive notice in most states (iii) Deeds Recorded Before Grantor Obtained Title Split authority whether recorded deed, received from grantor w/out titled when conveyed but who later obtains title gives constructive notice to subsequent purchasers most say NO (c) Installment Contracts (i) The courts will protect an installment buyer to the extent of his payments by either: Making the parties tenants in common; Give the buyer a lien on the real estate for the payment price. Allow the buyer to obtain title by forwarding the payments to the true owner. (ii) When a BFP purchases land, an adverse possessor has superior title. IX. Fraudulent Conveyances: court will set aside a fraudulent conveyance (sale which leaves someone insolvent) at the request of purchasers creditors. X. Real Estate Sale Contracts A. SOF makes real estate sale contracts unenforceable unless that contract or some memorandum is made in writing. The following elements must be contained in the writing: 1. Identification of the land; 2. Identification of the parties; 3. Words indicating a sale (e.g. I agree to buy, or to sell); 4. Signature of the party to be charged (e.g. could have been signature on the check); 5. The price (in most States) and terms of payment is not cash sale. Page | 108 of 153

B. Remedies for breach 1. Damages: the difference between the contract price and market value. (a) Liquidated Damages Clause: if P will not complete purchase, V may retain earnest money as liquidated damages for Ps breach of contract. This is enforceable if: (i) The earnest money is a reasonable advance estimate of probable damages, (ii) Earnest money is 10% or less of the price; (iii) The seller actually suffers some damage. 2. Specific Performance (a) Can have specific performance clause or liquidated damages 3. Rescission (placing party back where they started) C. Part Performance Doctrine: When there is no writing, but there is part-performance on the sale of land, which is used to support specific performance. 1. Most States require at least two of these three acts: (a) Takes possession before closing; (b) Pays part of the price before closing; (c) Makes improvements on the land before closing. (i) Arizona (and growing trend): any other acts if they show detrimental reliance. 2. Jurisdictional Theories (a) Evidentiary Theory: V can enforce the contract based on part performance to obtain specific performance (b) Reliance Theory: V cannot enforce the contract because V didnt perform the acts of reliance. D. Quality of Title to be Conveyed 1. There is an implied covenant in a contract of sale that a title is marketable. BUT: (a) Merger: once the purchaser has accepted the deed of a property, she can no longer make a claim for rescission on damages based on the implied covenant of marketable title in the contract, because the contract merges into the deed. Acceptance of the of the deed discharges the seller of liability under the contract. 2. If the title is unmarketable, it breaches the implied covenants and can be rescinded. (a) If V acted in bad faith, P can get damages. (b) If V acted in good faith, P could not get damages in Arizona, but maybe in other states. 3. Other breaches of a marketable title: (a) A title that is less than Fee Simple Absolute; (b) A building encroaching on anothers land; (c) Any encumbrances not discharged at closing, unless they benefit the property. 4. P must assert the breach before the closing. E. Time of Closing 1. Generally, time is not of the essence in a real estate contract. P will be liable for interim damages resulting from a delay. 2. However, time is of the essence if: (a) Stated in the contract; (b) Notice is given a reasonable time before closing; (c) The timing of closing is highly important to one party and the other party knows it. 3. If time is of the essence, it is a material breach; P can no longer enforce the contract and is liable for damages that results from the breach. F. Equitable Conversion: During the executory period, Vs interest is considered personal property, and the purchasers interest is considered real estate. 1. If the house burns down during escrow, P still has to buy house. (a) However, there is escrow insurance P can get (b) If V collects on insurance, then must refund P. G. Death 1. If V dies before closing: Vs interest in the house going to whoever collects Vs personal property. 2. If P dies before closing: Ps interest in the house goes to whoever gets the property from the probate estate. The payment will come out of the personal property of the estate of P. XI. Deeds A. Requirements Page | 109 of 153

1. Must be in writing and contain: (a) Identification of the land; (b) Identification of the parties; (c) Words indicating title is passing (e.g. grant, deed, transfer, convey, etc) (d) Signature of the Grantor. (e) Arizona: requires acknowledgment (notarization). 2. Not Needed: price, date, consideration. B. Execution: 1. Forgery: makes deed null and void. 2. Power of Attorney: Grantor may have the deed executed by and agent, but unless the grantor is present, the agents authority must be in writing. 3. Execution by a Corporation: the deed must be executed by 2 officers and bear the corporations seal, and if it conveys all or part of the corporations assets, a resolution of the board may be necessary. 4. Reformation: is an equitable action in which the court rewrites a deed to make it conform to the intention of the parties; where there is a mistake or inconsistency in the description of property in the deed one of the rules is that the physical description takes precedence of the quantity description. C. Delivery: 1. Requires act, and intent at the time of act (e.g. not delivering to have someone check the spelling, but with the intent to operate as a deed). (a) Intent: A deed is effective only when delivered with the intent for it to operate now. (b) Act: The recording is an act of delivery. Grantor must be alive for delivery. Grantee must be alive to accept delivery. 2. Theft of Deed from Grantor: undelivered deed is void; if deed it stolen, it was never delivered. 3. Recording as Delivery: deed that is recorded is presumed to have been delivered. 4. Delivery as Means of Escrow (Arizona): grantors executes deed and gives to escrow holder, and say one P pays, give deed to P. This is a valid delivery. (a) Even if grantor dies, if they put it in escrow before they died, then its ok. (b) If escrow holder is a crook, then grantor still retains the title. D. Covenants for Title and Estoppel by Deed: Type of Deed Quitclaim Full Warranty General Warranty Special Warranty (grant or convey) Arizona Covenants of Title Contains None (e.g. buy property as is) Contains All Present and Future Contains All Present and Future The Grantor has made no adverse conveyances; and There are no encumbrances put on the land by the Grantor. Future Covenants (Only future covenants run with the land) Warranty (is full owner and there are no encumbrances) Quiet Enjoyment Further assurances (Ill provide any title document you need in the future)

Present Covenants (if breached, breached at the time of sale of land) Seisin (I own the land) Right to Convey Against Encumbrances (e.g. no encumbrances on land)

E. Doctrine of After Acquired Title: if grantor does not have title to the land when it executes and delivers land to grantee, and subsequently grantor acquires it the title will then belong to the grantee. XII. Miscellaneous Topics: A. New Home Warranties of Quality: there is an implied warranty of structural soundness in the sale of a: 1. The property is for a personal residence; 2. The suit is against the builder; 3. Plaintiff must be the first buyer (Arizona permits suits by later owners on a theory). Page | 110 of 153

B. Existing Homes and Properties: 1. Seller may be held liable for fraudulent concealment if the seller had actual knowledge of a material defect in the property and did not disclose it. 2. Real estate brokers duties to purchasers to disclose material defects that the broker has actual knowledge of. Also have a duty to Seller to disclose adverse information about the buyer. C. Lateral and Subjacent Support: If digging on one property causes the land to subside, the digger is held strictly liable if the land would have subsided in its natural state, the digger is only negligent if the land subsided because of the weight of the house on the adjacent land. D. Fixtures: Personal property that is attached to the real estate. 1. Lease: A party may remove fixtures at the termination of the lease if they do so before the last day of the lease and repair the damage. (e.g. if the chattels arent removed before the end of the lease, then they belong to the landlord). 2. Sale: If fixtures are attached to the real estate with the intent that they be a permanent part of the real estate, they may not be removed upon sale. (Objective test) 3. Competing Security Interests: the first secured party to file or record has priority; Article 9 lender has a purchase money security interest and if their fixture filing occurred in 20 days that it was installed, they will beat the real estate mortgage holder. E. Water Rights: 1. Riparian Owners (water from land on a stream or river) can use the water (a) All the party wants for domestic purpose; (b) A reasonable amount for non-domestic purposes. 2. Percolating Water (water from a spring) owners can use the water: (a) Reasonable use for all purposes. 3. Surface Water: (e.g. like rain that floods) how may the owner discharge it on to neighboring land? (a) Traditional/Majority Rule: Common Enemy Rule- can dump on neighbors. (b) Growing Trend: Civil Law Rule - must discharge in a reasonable manner as not to harm your neighbor. (c) Natural Flow Theory: a landowner cannot alter the rate or manner or natural flow or surface waters where such actions would injure others above or below. XIII. Real Estate Security Devices: using land as collateral for debt. A. Three different types: 1. Mortgage: must be foreclosed judicially. 2. Deed of Trust: A deed of trust is a security device. It does not obligate the borrower to repay the money, and it is not effective unless there is an obligation created separately through a promissory note. To be valid, a security interest, a leasehold must be recorded. (a) may be foreclosed judicially or the power of sale by the Trustee. 3. Installment Contracts: may be forfeited without foreclosure, after notice and grace period as follows: (a) Under 20% paid: 30 days grace; (b) 20% 30% paid: 60 days grace; (c) 30% - 50% paid: 120 days grace; (d) Over 50% paid: 9 months grace. B. Terminology: 1. Documents: (a) Promissory note represents obligation to repay $; (b) Mortgage represents security for obligation 2. Borrower: Mortgagor (GIVE a mortgage, dont get one) (MR); Lender: Mortgagee (ME) (e.g. the MR will borrow $$ from the ME and executes a note and mortgage for that amount). C. Marketability: marketability means that the title is free and clear at the actual closing (e.g. seller can use purchase price to pay of mortgage and it will be deemed marketable.) D. Liens and Title Theory: (a) Tile Theory: bank may take possession of property before a foreclosure. Title is in the ME (lender) until the mortgage has been satisfied or foreclosed. Page | 111 of 153

(b) Lien Theory (Arizona): title remains in the MR (debtor) and the mortgagee holds only a security interest in the property. E. Mortgage Basic Concepts 1. Default: In the event of default, the lender has a choice of foreclosing on the mortgage or suing on the note. (i) Arizona: lender who holds a mortgage must release the mortgage in order to sue on the note. This election is not required for deeds of trust. 2. Acceleration: if MR defaults on note, ME can accelerate the debt, so that MR now owes the full balance (only notice of acceleration is required) (i) Arizona: borrower on deed of trust can reinstate loan, without acceleration, by paying arrearages plus costs/fees any time before 5pm on day before foreclosure (ii) Arizona: if ME or vendor has established pattern of accepting late payments without objection, it may be estopped to accelerate without first giving notice and reasonable opportunity for borrower to catch up on payments (e.g. no more Mr. Nice Guy Notice). 3. Equity of Redemption: after accelerating, ME institutes foreclosure proceeding. Last date MR can pay debt and redeem land is day of sale (right to redeem = equity of redemption) (i) Arizona: theres additional 6 month statutory redemption right after judicial foreclosure (NOT power of sale). MR or junior liens can redeem by paying price bid at sale + interest, etc. 4. Clogging: Borrower cannot waive right to redeem; Cant have effective statement of MR waiving rights to equity (to redeem if default) 5. Deficiency Judgment: when foreclosure sale produces less than actually owed, ME can get judgment against MR for remaining value owed. (a) Arizona: deficiency judgments are prohibited: (i) Judicial Foreclosure: if purchase money mortgage (to vendor or 3rd party), on 1-2 family house, and on < 2 .5 acres (ii) Power of Sale Foreclosure: on 1-2 family house, and on < 2.5 acres (b) Arizona: If deficiency judgment is prohibited as above, MEs also barred from suing initially on note; ME must for close first, then is barred from other action (i) ALL deficiencies (after foreclosure) are limited to difference between mortgage debt and lands fair market value 6. Equitable Mortgage (aka a disguised mortgage): if a deed to real property is given for security purposes (e.g. Ill give you the deed to my house, if you give me a loan), can be treated by court as an equitable mortgage to be treated as any other (i.e., after foreclosure MR may be able to buy back within 6 months in AZ) (a) Court will look at to determine whether deed is actually a mortgage: (i) The existence of debt or promise of payment by the deeds grantor (ii) The promise by the grantee to return the land if the debt is paid (iii) borrowers financial distress, (iv) whether borrower moves out when mortgage is executed, (v) if property sold far below market value (vi) Continue to pay taxes and repairs; F. Foreclosure - Multiple Mortgages on the Same Land (e.g. taking mortgages from multiple people- ME1 ME2 ME3) When a mortgage is foreclosed, the buyer at the sale will take title as it existed when the mortgage was placed on the property. 1. First in time mortgage is first priority to pay if first mortgage is called 2. Senior mortgage foreclosure: when mortgage is foreclosed its wiped off title. This is the original mortgage made on the property. (a) Optional Advance: additional advance made by the senior MR to the ME. MR is not contractually bound to do this. 3. Junior mortgage foreclosure: higher priority mortgage not affected and remain on title (a) Hypo: 1: Bank $20, 2: Credit Union $15, then Bank 2nd $15. (i) $20 is satisfied by the foreclosure (new buyer takes mortgage), and the profits are used to pay junior first (credit union) and then the optional advance (here, the bank 2 nd). Page | 112 of 153

(ii) Why? If a junior mortgage (aka lien) is placed on the property and the senior lender later makes an optional advance while having notice of the junior lien, the advance will lose priority to the junior lien. G. Transfer by Mortgagors: If a party assumes anothers mortgage, the lender can foreclose on the land or pursue the original borrower. 1. Due on Sale Clause: Consent of ME is required for transfer by MR to Grantee w/out paying off mortgage IF theres due on sale clause. Clauses are valid, except for junior liens, leases for < 3 years w/no option to purchase, transfers at death or divorce, transfers to spouse or children, AND transfers to inter vivos trust where trustor is also beneficiary 2. Assumption of Mortgage: if Grantee assumes mortgage debt, and theres a default, ME can foreclose land and Grantee is primarily liable, w/Grantor being secondarily liable (as a surety). ME can sue one or both (their choice). If MR/Grantor is forced to pay the debt, it can foreclose the mortgage against Grantee (under Doctrine of Subrogation). If MR is forced to pay deficiency, MR can get reimbursed by grantee 3. Subject to to Mortgage: If Grantee DOESNT assume mortgage debt (merely takes subject to mortgage), and theres a default, ME can foreclose, AND MR is only one personally liable on debt. If MR is forced to pay debt, MR can foreclose mortgage against grantee (using subrogation), but cant hold GE liable If GR doesnt assume the worst that can happen to GE who doesnt make loan payments is that GE will lose the real estate. If there is an assumption, GE can lose the real estate AND be held liable for the mortgage H. Special Priority Clause 1. Purchase Money Mortgages: presumed to have top priority. 2. An Optional Future Advance loses its priority to any intervening lien of which the future advance lender has actual knowledge. XIV. Zoning and Land Use Controls A. Zoning classifies land by three criteria: 1. Use: what is allowed on the land. 2. Height: elevation of structures. 3. Bulk: where structures may sit on the land (front side rear) B. Justification: Zoning is justified as an exercise of the police power which is general power of the states and their subdivisions to regulate the interest of the public health, safety, morals and general welfare. C. Carried Out: Zoning is carried out by an ordinance adopted by a city or county under the authority of a state enabling statute. D. Basic Procedures: 1. Re-Zoning: changes the zoning classification (legislative act). (e.g. from residential to commercial) (a) Carried out by local city (b) Quasijudicial, procedural due process need be followed in some states (c) Arizona: legislative act only 2. Variance: permission to violate a zoning ordinance (granted by the Board of Adjustment). Owner must prove unique hardship. Must also prove wont create harm to neighboring lands. 3. Conditional Use Permit: required for sensitive uses (granted by the Board of Adjustment). (a) Examples: funeral homes, drive-in businesses. (b) Granted with numerous conditions to protect neighboring land and the general public E. Effects of Violation on Sale: if a new buyer violates the setback allowance in the zoning ordinance, the seller cannot successfully sure for specific performance because title is unmarketable. There is an implied warranty in every land sale contract that at closing the seller with provide the buyer with marketable title; an existing violation of a zoning ordinance does render a title unmarketable. F. Pre-existing non-conforming uses: uses may not be immediately shut down. The ordinance may provide for a period of amortization, or may allow the use to continue indefinitely but may not be enlarged or changes to a different nonconforming use (e.g. retail stores and offices and rezoned residential you can keep doing what your doing, but cant change it to a new business) 1. If you abandon your non-conforming use for one year, then you cannot assume doing it again.

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G. Judicial Attacks on Zoning: 1. Conflict between the ordinance and the state enabling statute; statute wins by preemption. 2. Spot zoning (impermissible): zoning not in accordance with a common plan. 3. Zoning regulations are only required to satisfy a rational basis test (e.g. can say it challenges substantive due process). (a) Zoning is constitutional and does not violate the 5A, despite their restriction on the uses to which a landowner may devote his property (even to his economic disadvantage) as long as it is neither unreasonable nor arbitrary. 4. The Zoning violates federal statute (e.g. Fair House Act or 1983) H. Takings: "nor shall private property be taken for public use without just compensation" 1. Remedy: compensation 2. Loretto: Permanent physical invasion or occupation of land; requires compensation 3. Lucas: Regulation so sever theres no remaining economic value. Even this degree of regulation wont be a taking if activity being regulated would be considered a common law nuisance 4. Penn Central: 3 part test under which court must balance: (a) Economic impact of the regulation (doesnt quite qualify as Lucas taking) (b) Landowners reasonable expectation when land was bought (c) Importance of the regulation to the public

Brief Summary (but look at cases for tests to apply):


Taking Public Use Permanent Physical Invasion Regulation goes too far -Takes away all economical viable use. Isnt a nuisance Not a Taking Nuisance Temporary Invasion/Regulation Is a Taking, but should grant injunction Isnt for the public use (purpose) Private use outweighs Public Use Unreasonable

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Secured Transactions UCC Article 9 Key areas to know: Categories of collateral Elements of attachment Different ways of perfecting Basic priority rules Know some of the PMSI exceptions I. What is a Secured Transaction A. A transaction intended to create a security interest in personal property or fixtures. Generally involves a sale on credit or a loan in which the seller or lender obtains a lien on some or all of the debtors property as security for payment. 1. Must be a Sale 2. Must be a Sale covered by UCC (e.g. goods, not real estate, services, or just money) 3. Must have Actual Interest in UCC item 4. B. Terminology: 1. Personal Money Security Interest [PMSI]: (a) Secured party sells debtor collateral on credit and retains a security interest in the item sold (b) An enabling loan: loan to a debtor that enables the debtor to buy specific collateral, and creditor takes sec interest in that specific collateral (i) The proceeds must be actually used to acquire the collateral 2. Attachment: (a) Deals with those steps legally required to give the secured party a security interest in the collateral that is effective as against the debtor. Once a Si attaches, it is effective against the D and the Creditor has all the rights of a secured creditor under article 9 (b) A creditor is not a secured creditor until attachment. (c) The steps legally required to give secured party a security interest in the collateral that is effective against the debtor 3. Perfection: (a) Steps legally required to give secured party an interest in the collateral that is effective against the world. (b) Gives public notice of the SI (c) Financing Statement (UCC-1 form): the document used to perfect a security interest 4. After-Acquired Property Clause (a) A secured Party often will want to obtain a SI not only in Debtors present property, but also in property that the D will obtain the future. 5. Future Advance Clause: (a) The SP often contemplates making future loans to the debtor and wants to secure these future advances in the present SA. This is permissible. C. Types of Collateral: 1. Goods tangible, movable, personal property (a) Define: Goods include all things which are movable at the time the SI attaches, and include the unborn young of animals and growing crops. Goods also include fixtures. (b) Goods UCC classifications: (i) Consumer goods used or bought for use primarily for personal, family or household purposes (ii) Equipment (fall back category) used or bough for use primarily in business (iii) Farm products crops or livestock or supplies used or produced in farming operations or products of crops or livestock in their unmanufactures states (iv) Inventory held by a person who hold them for sale or lease or to be furnished under service contracts; materials used or consumed in a business for a short period of time (c) Define by how the good(s) is used in hands of the debtor 2. Semi-Intangible Property (a) Instruments: negotiable instruments and any other writing which evidences a right to the payment of a monetary obligation, and which are in the ordinary course of business transferred by delivery with any necessary indorsement or assignment. Page | 115 of 153

II.

III.

(b) Documents: A document which in the regular course of business is treated as evidencing that the person in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers. (c) Chattel paper: A record which evidence both a monetary obligation and a security interest in or a lease of specific goods. (d) Investment property: includes items such as stocks, bonds, mutual funds, and brokerage accounts containing such items. (e) Accounts (receivable): a right to payment for goods sold (f) Deposit accounts (bank): account maintained with a bank (g) Commercial tort claims: claim arising in tort with respect to which the claimant is an organization, or where the claimant is an individual and the claim aorse in the claimants business or profession and does not include damages for personal injury o rthe death of an indivudal (h) General Intangibles: any personal property not coming within the scope of the other definitions. D. Scope of Article 9 1. Any transaction, regardless of form, that creates a security interest in personal property or fixtures by contract 2. An agricultural lien 3. A sale of accounts (i.e., to a factor) 4. Certain Consignments (a) i.e., does not need to comply with Art. 9 if goods are worth less than $1K or for consignor used the goods for personal, family, or household use. 5. A secured sale disguised as a lease (a) If at the time of entering into the transaction, it was reasonably likely the lessor would get the item back when it still had meaningful value, it is a true lease. Otherwise (i.e., when you buy the item for a dollar at the end of the term) its a sale with a security interest Creation of SI by Attachment: A. Attachment: As soon as Attachment occurs, the SI is created. Attachment requires: 1. A Security Agreement (a) Oral SA: (aka Pledge): (i) Oral SA; (ii) allowed when SP has possession of Collateral; (iii) language must create SI; OR (b) Written SA: (i) Any language showing an intent to create a SI (ii) authenticated (signed) by debtor (any symbol indicating intent to authenticate). (iii) Description of the collateral Test: Description must reasonably identify the C (if SI is in timber to be cut, then a description of the land concerned) NO Super-Generic: (all of the debtors property) 2. Value by SP (a) Any consideration sufficient to support a simple contract is enough, (b) past consideration is sufficient 3. Rights in the Collateral by Debtor (a) Cant grant SI in something you dont own Scope of the Security Interest A. Future Advances: Debt secured may include future advances 1. If sec agreement has a future advance clause 2. This secures loan creditor makes at present, plus other loans it may make in the future B. After Acquired Property: 1. Creditors interest will attach to property now owned, or later acquired: (a) Consumer Goods Exception: a SI does not attach under this clause to consumer goods unless the D acquires rights in them within 10 days after the SP gives Value (b) Commercial Torts Claims: Clause ineffective as to commercial tort claims 2. SAs With no After-Acquired-Property Clause: (a) General Rule: If clause is missing in the SA, then the SPs SI only reaches C that the D had rights in at the time the D signed the SA. (b) Exception: Clause Implied if C is of a type that is rapidly depleted and replenished (inventory and accounts) C. Proceeds: Property secured generally includes proceeds Page | 116 of 153

1. Proceeds = whatever is recorded upon the sale, exchange, collection, or other disposition of collateral or proceeds (i.e., whatever your original collateral morphs into). 2. Includes insurance proceeds when collateral is lost or damaged unless payable to some one other than D or SP 3. Unless otherwise agreed, a SI automatically gives SP a right to identifiable proceeds (a) Identifiable = creditor must be able to trace proceeds to original C (b) Commingled Proceeds: Use lowest intermediate balance test to identify which funds are secured by SP: (i) Look at balance starting at time proceeds were deposited, and ending at time you are applying the test. Lowest balance during that time period is the amount of the sec partys identifiable proceeds. (ii) Cannot exceed value of the cash proceeds originally deposited D. Supporting Obligation: 1. The Attachment of a SI in C also is an Attachment of a SI in a Supporting Obligation for that C 2. Supporting Obligation = Guarantee or a surety, aka a promise to pay the debt of another. IV. Perfection of the Security Interest: Creates rights of secured party against third parties (this is how you give notice of your security interest to the world). Initial Method Period Perfecting by Filing Financing Statement Renews Debtor Moves States By Filing a Continuation Statement Within 6 Months of 5 Year Expiration By Refiling in New State Within 4 Months of Change Collateral Transfers By Refiling Within 1 Year of Change

By Filing with Secretary of State 5 Years

A. Attachment Makes you a Secured Creditor; Perfection Makes you a Perfected Secured Creditor 1. If you screw up your perfection, you are still a secured creditor as far as the debtor is concerned. B. Methods of Perfection - A SI is perfected when it has attached plus some other step (possession or filing). 1. Automatic Perfection: (a) PMSI in consumer goods: is automatically perfected 2. Possession of C by SP (a) SI is perfected from moment of possession (b) Does not relate back to time of attachment (c) Continues only so long as possession is retained (d) Impossible for intangibles (you cant physically posses them) 3. Perfection by Control (a) Investment Property: (i) control is when SP may be able to sell the property without further action of owner; all the right steps have been taken by SP (b) Non-consumer deposit accounts: (i) Control is the only method of Perfection (ii) Methods of Control: SP = Bank in which a nonconsumer deposit account is maintained, then Bank/SP automatically has control over the deposit account. Putting the deposit account in the SPs name Control Agreement: Agreeing in an authenticated record with the D and the bank in which the deposit account is maintained that the bank will follow the SPs orders without further consent by D (c) Electronic Chattel Paper: an SP has control if: (i) A single authoritative copy of the record or exists, and (ii) This authoritative copy identifies the SP as the assignee of the record; and (iii) The authoritative copy is communicated and maintained by the SP or its designated custodian. 4. Notation of a lien on a certificate of title (a) The only way to perfect SI in an automobile is for the SP to note its lien on the certificate of title (included consumer goods covered by title statute) Page | 117 of 153

(b) Exception: if debtor is holding cars as inventory (car dealer), SP must perfect by simply filing a fin stmt against inventory. 5. Filing a Financing Statement (Form UCC-1) (a) Statement gives notice that a person may have a security interest in the collateral indicated (b) Further inquiry is required to disclose the complete state of affairs (c) NOTE: a fin stmt can be filed even before a security agreement is created, just to perfect a creditors priority immediately (i) General rule: against other secured creditors, first to file OR perfect wins (d) Contents of Financial Statements (i) Debtors name Individuals must use their actual name as they are known in the community (no trade names) Corporations and partnerships may use registered name of the company Name errors: Name misspelled: valid if not seriously misleading Test: If a search under the correct name would still turn up the correct stmt, the mistake is not seriously misleading SP is not responsible for errors by filing office If they file you mistakenly under wrong name such that no one could find you, you are still perfected Debtors name change: If name change is seriously misleading, stmt is effective against collateral acquired by debtor within 4 months after the change An amended stmt should be filed within 4 months to maintain perfection (ii) Description of collateral Test: reasonably identify the C Categories okay Super generic Okay: All assets or all personal property (iii) Secured partys name Error in SP name will not be seriously misleading b/c stmts are filed by debtors name (iv) Real property related fin. stmt When realty interests are involved (timber, fixtures, minerals, etc) the fin stmt must describe the realty and must indicate that it is to be filed in the real property records (v) No signature required, but debtor must authorize the filing D automatically authorizes the fin stmt if she authenticates the SA covering the same C (vi) Authenticated SA itself can be filed instead of a UCC-1, but must contain all elements above (e) Where to file a Fin Stmt (i) Generally Rule: file with the Secretary of State, unless otherwise specifically provided in a States Art. 9 (ii) Real Estate: If collateral relates to real estate (timber, minerals, etc.), file in the real estate records of the county where the real property is located (iii) Multiple state transactions General rule: file in the state where D is located Individual: located at her principal residence Business organizations: located wherever business is organized Unregistered business orgs: located where its place of business is; if more than one place of business, located where its chief executive office sits If debtor moves out of state: SP stays perfected for 4 months, then must file new fin stmt If collateral is transferred out of state to a new debtor: sec party will stay perfected for 1 year, then must file new fin stmt in the new jurisdiction (f) Life span of financing statement (i) effective for 5 years from the date of filing Page | 118 of 153

(ii) A fin stmt can be continued with a continuation stmt (UCC-3 form) NOT a new financing statement (iii) A continuation stmt must be filed within 6 month window before fin stmt expires (iv) If fin stmt dies, you must then file a new fin stmt (g) Terminating a fin stmt (i) Obligations between D and Creditor satisfied, D may demand that SI be released (ii) D submits authenticated demand, and SP must provide D with termination stmt within 20 days (iii) Consumer Goods: SP must file a termination statement within 1 month of obligation ceasing, or w/in 20 days of receiving demand from D (iv) Failure to Comply: SP liable to D for $500 + any loss caused to D (h) Perfection of proceeds (i) If a SP has a perfected interest in C, it automatically has perfected SI in that collaterals proceeds for 20 days. (ii) To remain perfected in the proceeds beyond 20 days, SP must take new action, UNLESS: The proceeds are identifiable cash proceeds; or Same Office Rule: SI in original C was perfected by filing FS proceeds not purchased with not purchased with cash proceeds FS for the new C would be filed in the same office as the original C (i) Change in use of collateral (i) If D changes the way it uses collateral (i.e., was treating as equipment, then starts treating it as inventory), the FS remains effective to perfect the SI (ii) SP has no duty to monitor the collateral or amend the FS V. Priority: Applies where SP and some 3P claim rights to the same C A. SP (Perfected) vs. SP (Perfected) 1. 1st to File or Perfect Has Priority: (a) PURE RACE statute notice is irrelevant (i.e., knowledge doesnt matter) B. SP (Unperfected) vs. SP (Unperfected) 1. First to Attach has Priority: C. Special rules: 1. PMSI in Goods (other than inventory or livestock): (a) A PMSI in goods has priority over a conflicting SI in the same goods if the PMSI is perfected (i) at the time debtor took possession of the goods, or (ii) within 20 days after 2. PMSI in Inventory or Livestock: (a) A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory or livestock if: (i) It perfects, and (ii) Sends an authenticated notification to holders of previously filed conflicting secured interests in the collateral by item and type. (iii) Holder of the conflicting secured interest must receive this notice within 5 years before debtor takes possession (i.e., the notification is effective for deliveries of the same type of collateral for 5 years). D. Seller PMSI vs. Financer PMSI: a seller PMSI has priority over a conflicting lender PMSI E. Special Rules for Investment Property: A security interest perfected by control has priority over a conflicting security interest perfected by any other methods (i.e., control beats all) F. Special Rules for Deposit Accounts: 1. A SI perfected by control beats a SI perfected by any other methods (i.e., control beats all) (a) NOTE: control is the only way to perfect a bank account interest; the way this fight arises is when a creditor other than the controlling bank has a claim to the proceeds (cash) going into the account (b) Bank with control will win 2. If Conflicting interests each were perfected by control, they rank according to the time of obtaining control

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3. A SP who has obtained control by putting the deposit account in its own name has priority over all other SPs with control 4. A bank that has control because it maintains the deposit account has priority over all other SPs with control, except a SP who has obtained control by putting the deposit account in his name. G. SP vs. Buyer of the Collateral 1. Authorized Sales (a) SP authorizes Sale free of SI: buyer takes free of the SI (b) Authorization may be express, or implied due to type of sale or from the sellers conduct (i.e., you sell w/o authorization but seller acquiesces); Ex: grocery items example (c) If inventory, Most courts imply authorization 2. Unauthorized sales (a) A buyer in the ordinary course of business (other than a person buying farm products from a person engages in farming operations) takes free of SI created by his seller, even though the SI is perfected and even though buyer knows of its existence (b) Buyer in ordinary course: (i) Person who buys goods in good faith (w/o knowledge that the sale violates anothers rights in the goods) (ii) in the ordinary course (iii) from a person in the business of selling goods of that kind (c) Buyers not in the ordinary course of business (i) Take subject to perfected SI (ii) Take free from unperfected SI unless they know of the SI (d) Consumer-to-consumer sales (garage sale rule) (i) Buyer takes free of SI (even if perfected) (ii) if he has no knowledge of the SI, (iii) as long as he buys for value and (iv) for his own personal use (v) UNLESS SP had filed a FS covering such goods 3. SP vs. Judgment Lien Holder (a) If SP perfects before person becomes a lien creditor, SP wins (b) If person becomes lien creditor before SP perfects, lien holder wins (c) lien creditor = an unsecured creditor who has obtained a judgment and has levied on that judgment (i.e, unsecured creditor becomes a lien creditor when he levies) 4. PMSI vs. Lien Creditor (a) If SP files w/respect to a PMSI w/in 20 days after debtor takes possession of the collateral, he beats lien creditor, even if lien creditors rights arise during that 20 days 5. Priority for Future Advances (a) A SA can secure present and future advances. (b) A future advance by a SP has priority over a lien creditor if the future advance is made (i) Without knowledge of the lien, OR (ii) Within 45 days of the lien arising; OR (iii) Pursuant to a commitment entered into without knowledge of the lien 6. SP vs. Statutory Lien Claimants (mechanics liens) (a) Statutory lien beats perfected SP VI. Default A. Default: triggers the right of a SP to proceed against collateral 1. Default is not defined by UCC 2. Default is defined in the SA 3. If not specified, default is restricted to failure to perform or pay obligation when it is due B. Self-help Repossession 1. Upon Default: SP may Possess C w/o judicial process if it can be done without a breach of peace. 2. If breach of peace occurs, SP loses authorization to repossess, may be sued for conversion (and possibly trespass, battery, etc.) and is liable for actual (and frequently punitive) damages 3. Breach of the peace: (a) Test: any conduct that has the potential to lead to violence (b) Physical presence by the debtor + verbal objection is enough to create a breach of peace (c) Unauthorized entry into a home (even uncontested) is usually considered a breach 4. NOTE: if self-help is unavailable, secured party can always use replevin to get the goods (e.g., call the Sheriff to do it for him) C. Retention of Collateral (strict foreclosure) Page | 120 of 153

VII.

1. After default and repossession, secured party may propose retaining the collateral in full or partial satisfaction of the debt (a) Secured party must first notify other secured parties who have a claim against the collateral (b) If any notified party objects within 20 days, the collateral must be disposed of by sale (c) Debtor must also consent by: (i) Agreeing in an authenticated record, or (ii) Failing to object w/in 20 days D. Retention of Collateral (strict foreclosure): 1. SP may propose retaining C in full/partial satisfaction of the debt. (a) SP must send notice to (i) any other SP from whom the foreclosing party has received notice of a claim to the C, and (ii) any SP with perfected SI by filing a FS or noting its SI on a certificate of title. (iii) If Objection within 20 days: C must be disposed by sale. (b) D must consent to SP retaining: Consent by: (i) Agreeing in an authenticated record or (ii) In the case of strict foreclosure, failing to make an authenticated objection within 20 days after SP sent notice (no so in partial disclosure) E. Resale of Collateral 1. After default, secured party may sell, lease, license or otherwise dispose of collateral (a) Secured party may apply the disposition of collateral to the reasonable expenses of preparing the property for resale, and to the extent provided for the SA, the reasonable attorneys fees and legal expenses incurred by the SP and then to the satisfaction of the indebtedness. (b) Sale may be public (auction) or private (c) Sale discharges the SI and all subordinate SIs, but purchaser may still be subject to superior interests (d) Notice (i) Reasonable written notice must be given to debtor, and (ii) To any other SP (iii) not necessary when the C is perishable, threatens to decline rapidly in value, or is of a kind ordinarily sold in a recognized market (stock) (iv) D may waive his right to notice (v) Timeliness: sent within reasonable time before the sale (10 days in non-consumer transactions) (vi) Content: Content of notice depends on type of sale and type of collateral 2. Commercially Reasonable Sale (a) Every aspect of the sale (method, manner, time, place and terms) must be commercially reasonable 3. SP buying C: (a) Sp may but at any public sale (b) May but at private sale only if the C is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations 4. Secured Partys Right to Deficiency (a) If sale brings in less than D owes, SP can has deficiency judgment for remaining amount 5. SP fails to Comply with Resale Requirements (a) He may not have right to deficiency judgment (b) General rule: there is a rebuttable presumption that the sale proceeds equal the amount of the debt (i.e., seller is stuck with amount made from sale) 6. Debtors Right to Redeem (a) before SP has resold the C, decided to keep it, or contracted it away, the D may redeem (i) Debtor must tender fulfillment of all obligations (usually pay in full, b/c most security agreements have an acceleration clause) Fixtures A. Fixture: something attached to the real estate that is so permanent that it is essentially impossible to separate B. Perfection 1. A fixture filing must be made in the office where a mortgage on the real estate would be filed 2. Filing must reasonably identify the real estate and show the name of the owner C. Rights on Default 1. Sec creditor in a fixture CAN repossess even if it would render the property uninhabitable (economic and moral impact is irrelevant) Page | 121 of 153

D. Priority 1. SP vs. Subsequent Real Estate Interest (a) A SI in fixtures has priority over any real estate interest that arises subsequent to the perfection of the SI by fixture filing. 2. SP vs. prior real estate interest (a) Prior real estate interest that is properly recorded beats a SI that subsequently arises (b) Exception: a PMSI beats an earlier in time realty interest if it is perfected by a fixture filing before the goods become fixtures, or within 20 days thereafter (c) BUT: a construction mortgage always beats a subsequent PMSI in fixtures E. When is fixture filing unnecessary? 1. For readily removable: (a) Factory or office machines (b) Equipment not primarily used in operation of the real estate (c) Replacement of domestic appliances which are consumer goods 2. Any method of perfection in these goods before they become fixtures entitles the sec party to priorty VIII. Accessions A. Definition 1. Goods that are physically united with other goods in such a manner that the identity of the original goods is not lost 2. Ex: SP has a SI in tires, then the tires get put on a car; SP does not lose his SI B. Perfection 1. If a sec int is perfected when the collateral becomes an accession, the int remains perfected C. Priority 1. Generally, the previous rules for priority apply to accessions 2. Special rule: (a) When a SI exists in a good subject to a certificate-of-title statute (i.e., a car), party with interest in the car beats party with SI in an accession to the car D. Removal of the accession 1. A SP may remove an accession from other goods if his SI has priority over every other party with an interest in the whole 2. Party removing the accession is responsible for the cost of any damage caused by the removal

Page | 122 of 153

Torts I. Intentional Torts A. Typical Questions: 1. Supersensitive Plaintiff: plaintiffs sensitivities are irrelevant, unless defendant knows of sensitivity (e.g. giving someone a long stare and they pass out). Threat plaintiff as an average person. 2. 3. Incapacitated Defendant: everyone is liable for intentional torts, even those without capacity (e.g. includes kids, mental incompetents, and drunk homies). Transferred Intent: intent can be transferred from person-to-person and tort-to-tort in: (a) Battery, (b) Assault, (c) False Imprisonment, (d) Trespass to Land, or (e) Trespass to Chattels.

B.

Prima Facie Cases: To establish the prima facie case for ..., P must prove 1. Battery (Voluntarily and Intentionally) (a) Harmful of offensive unpermitted contact (i) e.g. what an average person would find offensive or harmful (ii) Remember Intent: If the defendant did not know that he striking a person, he could not of known or have intended to commit battery. (However, this does not rule out transferred intent, like assault). (b) With the plaintiffs person. (i) The person of another or an object closely associated with it. Do not actually have to touch the plaintiffs body. (e.g. grabbed plate from P, or shook car with P in it). (ii) Construe plaintiffs person very broadly. (c) Damages (not needed) 2. Assault (Voluntarily and Intentionally) (a) Apprehension (i) Must be reasonable (e.g. would an average person believe he was going for the fun) (ii) Words alone are not enough; words must be coupled with conduct. (b) Of an immediate Battery

Note: Choose Battery over Assault when both are answers, (aka Battery = AZ Assault) in essay. 3. False Imprisonment (Voluntarily and Intentionally) (a) Intentionally and unlawfully confining another (i) Actual or apparent barriers (ii) Only a brief period of time necessary (b) No reasonable means of escape known to P (c) P has to have knowledge of confinement during confinement (i) Shoplifting Exception: Reasonable belief as to theft Reasonable manner of detention (no deadly force) Detention for a reasonable period of time. Intentional Infliction of Emotional Distress (Voluntarily and Intentionally or Recklessly) (a) Extremely outrageous conduct to cause emotional distress, and (i) Non-outrageous conduct becomes outrageous when: Continuous: Conduct is continuous Type of Plaintiff: kids, elderly, pregnant, adults w/ known sensitivities. Type of Defendant: common carriers, innkeepers. Only applies if P is a passenger or guest (e.g. bus driver insults driver of car going by not outrageous). (ii) Must be directed at P, but, if family present and known to be family by the D, they can sue. (iii) D can be liable even if did not intent for P to suffer emotional distress, as long as he was reckless as to the effect of his conduct. Page | 123 of 153

4.

(b) Damages: clear proof of substantial emotional distress required not actual physical injury. 5. Trespass to Land (Voluntarily and Intentionally) (a) Act of invasion by D, (i) Does not require D to personally go onto land (e.g. throws rock onto land, pushes someone onto land). However, does require that some physical object go onto land (e.g. loud music not trespass). (ii) Remember: must intent to invade land (e.g. the homeowner did not intent to frighten the boy onto the neighbors property not trespass). (b) Of Ps land. (i) An intrusion upon land, below land, or airspace above (e.g. ball sails over the surface of land enough).

II.

Trespass to Chattels and Conversion (Voluntarily and Intentionally) (a) An interference with possessory right to chattel. (i) Possession (Dispossession), or Short time detained = Trespass Long time detained = Conversion (ii) Damage Some damage = Trespass Lots of damage = Conversion Conversion Result: If the interference with Ps possessory rights in the chattel are really serious, it warrants that D to pay fair market value of the chattel at the time and place of the conversion. Defenses to Intentional Torts A. Consent 1. Received express (e.g. words) from someone with capacity (a) Cannot be a result of mistake or law or fact, fraud, duress, or coercion 2. Received implied consent from someone with capacity (e.g. custom & usage, or Ps conduct). (a) Emergency Doctrine: Can also be implied by law if it is an emergency and P is: (i) Unconscious or unable to grant or deny (ii) No reason to believe the person would refuse (iii) Reasonable person in the same position would consent (iv) Clear need for immediate decision. Beyond Scope of Consent: must be with within the scope of the implied or express consent (e.g. okay to touch player during game of touch football, but cannot kick him in the nuts).

6.

3.

B.

Self-Defense, Defense of Others & Defense of Property 1. Timing Test: defense is available when the tort is now occurring or just about to occur. (a) If the tort has already been committed, there is no defense. (b) Hot Pursuit: if one is in hot pursuit of another who has wrongfully taken his/her chattel, the tort is regarded as still occurring. Belief: Reasonable belief that the tort is being committed (e.g. reasonable person would believe they are going to be attacked); (a) Retreat: No duty to retreat before using self defense (i) Modern Trend (AZ): duty to retreat before using force that could cause serious bodily harm, if you can do so safely.

2.

C.

Force: Reasonable amount of force used. (a) Self-Defense and Defense of Others: justifies deadly force is reasonable. (b) Defense of Property: never justifies deadly force (e.g. may not intentionally use a vicious dog to protect your property). (i) In Your Own Home: not a defense of property but a defense of self or others; you are not protecting your house; you are protecting you and your family. Necessity 1. This defense is only available when the tort is against property. Page | 124 of 153

3.

(a) Necessity prevails over defense of property (e.g. P tries to keep D off of land when D is in an emergency. D will prevail over P). 2. Public Necessity: The invasion is for the benefit of many and is an absolute and unlimited privilege. There is no liability. This occurs where the public good is threatened with injury substantially more than the seriousness of Ds interference. Private Necessity: The invasion is for the benefit of a limited number and is a limited privilege. Allows D to be liable for only actual damages to the land. Necessity prevails over other D.

3.

D.

Unforeseeability Not Defense! 1. Remember, unforeseeability of superseding forces that break that casual connection between the action and the injury to does not apply in intentional torts because the conduct was a substantial factor in brining about the injury. 2. Chain of Events/Totality of the Action: D need not know with substantial certainty that the chain of events causing injury would occur; it is enough that D understood the consequences original intentional action (e.g. intended assault results in golf ball hits golf cart, which crashes, and injures bystander). Contributory Negligence Not Defense! This is not an available defense against a claim for intentional tort.

E. III.

Defamation: requires proof of a false and defamatory state of or concerning the P published to a third party causing damages. A. Requires: (1) defamatory statement about P, (2) Publication, (3) injury to Ps reputation, (4) 1A only: Falsity & Fault. First: Defamatory Statement about this P 1. Fact: Defamatory statement must be an assertion of fact, not mere name-calling (e.g. you have stolen vs. you are a douchebag). 2. Interpretation Process: a facially defamatory statement is presumed to be false (unlike under the 1A). (a) If a statement is not defamatory on its face, the P must plead extrinsic facts (to show inducement) and establish the defamatory meaning of them by innuendo. (b) If the statement does not clearly refer to the P, P must show colloquium to show he was the one intended. Second: Publication 1. Communication to 3rd: Communication to a third person that is capable of understanding the defamatory conduct either intentionally or negligently. 2. The communication may be either intentionally or negligently made (direct or overheard in a crowded room). 3. The third person must be capable over understanding the defamatory content (e.g. must be in a language understood by 3rd person). Third: Injury to the Ps Reputation: 1. Injury is presumed for every libel per se (written) and slander per se. (a) Slander per se categories: (i) Business or profession (ii) Crime involving moral turpitude (e.g. theft). (iii) Loathsome disease (e.g. leprosy and venereal disease) (iv) Imputing unchastity to woman. (b) Libel per se v. Liber per quod (AZ): a publication that impeaches the honesty, integrity, and reputation of a person is libelous per se and actionable without proof of special damages. 2. Special Damages Needed: Injury is not presumed for slander not per se. (a) If injury cannot be presumed, P must show special damages (i.e., monetary damages) to their reputation (e.g. must have effected their job, not just a friendship). Page | 125 of 153

B.

C.

D.

E.

Fourth: Defamation with First Amendment: the 1A protects the freedom of speech and requires additional protection of speech if the plaintiff is a public person or the issue is of public concern. 1. Public Concern: Only applies if statement involves a matter of public concern or public figure. (a) If P is a public figure, assume that it is a matter of public concern (e.g. the governor gets in trouble). (b) Private person is in protest involving 1A right to speak protest would be of public concern. Must Prove: (a) False: P must prove statement was false (burden of proof as to truth of falsity is shifted now from D to P). (i) Truth will not be a defense; as falseness is a requirement to P bringing suit. (b) Fault: P must prove D was at fault. (i) Public Figure: must prove either intentional or reckless conduct of D (not reasonable person). Malice Test: Malice is the knowledge that the statement was false, or reckless disregard as to its truth or falsity (e.g. knew or didnt find out) Example: writing about electoral candidate, story comes from opposing party, and does not confirm the story. (ii) Private Person: must prove negligent conduct. If P can prove malice, they can also get presumed and punitive damages.

2.

IV.

Defenses to Defamation 1. Consent 2. Truth, unless First Amendment. 3. Privilege: given when we want someone to speak out without liability. (a) Absolute Privilege: cannot be lost (i) Communication between spouses (ii) Three governmental branches (judicial branch is an exam favorite and anything said in the course of litigation that is reasonably related will be absolutely privileged). (b) Qualified Privilege: exists only if exercised in a reasonable manner and for a proper purpose and will be lost if the speaker acted with malice (e.g. can be lost if abused). (i) References or reference letters (ii) Fair Comment Privilege: permissible to make remarks that disparage anothers acts in the critique of general public interest. Invasion of Privacy F. A. Appropriation: When the D appropriates without permission Ps name or picture for commercial advantage. 1. Commercial advantage: is limited to the promotion of goods and services (e.g. doesnt need to actually gain profit, but use for the purposes of promoting goods or services). Intrusion: Intrusion by the D into the Ps privacy or seclusion. 1. Reasonable: Is objectionable to the reasonable person. 2. Private Corner: D has to get into the Ps private corner of the world (e.g. not paparazzi following you in public; however could be intentional infliction of emotional distress). Does not have to be physically in corner of world (e.g. could be peeping into Ps bedroom). False Light: Publication of facts placing the P in a False Light 1. Reasonable: Must be objectionable to the reasonable person. 2. Wide Dissemination: Publication for False Light requires wide dissemination (vs. defamation which only requires communication to a 3rd party). 3. Plan B to Defamation: this tort is a fall back to defamation when the statement wasnt defamatory but created a false negative impression (e.g. false impression in a picture that someone is extremely obese). (a) If matter of public concern still has to satisfy Malice Test (knew false or reckless)

B.

C.

V.

Private Facts: Publication of Private Facts about the P. 1. Reasonable: Must be objectionable to the reasonable person. 2. True: Here the statement is true. 3. Private: fact must be private information (e.g. a picture of P in a public place is not a private fact). Misrepresentation D. Page | 126 of 153

A.

Intentional Misrepresentation: is a misrepresentation of fact made with malice and with the intent to induce reliance which creates a justifiable reliance. 1. Elements: (a) Fact: Misrepresentation of fact (i) Speak: One must affirmatively speak, silence is not enough unless: Fiduciary relationship Real property sale where P cannot reasonable discover material facts (e.g. house built on fill) Ds prior statements have misled P. (b) Malice Test: The statement was made either knowing it was false or with reckless disregard as to its truth or falsity. (c) With intent to induce reliance (d) Creates a Justifiable Reliance (e) States a fact and not an opinion, unless rendered by an expert. 2. Defenses: None. Negligent Misrepresentation 1. Elements: same as above, however: (a) Scienter is negligence malice 2. Commercial Setting: Can only be used in a commercial setting.

B.

VI.

Interference with Business Relations (Voluntarily and Intentionally) A. B. C. D. E. Relationship: P must have valid contractual relationship or business expectancy (i.e. either existing or prospective). Know: D must knows of the relationship Intend: D must intend to or know actions would interfere with Ps relationship. Damages: There must be actual damages resulting from interference. Defenses: 1. Persuasion: interference must be substantial conduct, cannot be mere oral suggestion. 2. Prospective Relationship and Competitors Privilege: Ds conduct maybe privileged where it is a proper attempt to obtain business for itself or protect its interest if the relationship with P is merely prospective and P and D are competitors. This is question of fact for jury. 3. Close Relationship with D: if the 3rd party is in a close relationship with D (e.g. lawyer, family member), then there may be a privilege. This is question of fact for jury.

VII. Wrongful Institution of Legal Proceedings (Voluntarily and Intentionally) A. Institution of Criminal Proceedings: 1. Ds Act: Must have been initiated by the tort D himself (prosecuting attorney absolutely privileged) 2. Innocence: P must prove innocence; i.e., termination of the proceedings in Ps favor b/c innocent 3. No PC: There was an absence of probable cause for prior proceedings (likely probable if: there was a grand jury indictment or D had been acting upon advice of informed counsel) 4. Improper Purpose/Intent For Bringing Suit 5. Actual Damages 6. Defenses: none. Wrongful Civil Proceedings and Abuse of Process: most states now have it.

B.

VIII. Negligence: Requires a showing that plaintiff was owed a duty that was breached and actually and proximately caused damages. A. Duty: A duty is owed to foreseeable plaintiffs to prevent foreseeable risks of harm from causing injury . 1. Foreseeable Plaintiff (a) Andrews Approach: If negligence to one person results in injury to another person, that person is foreseeable. (b) Cardozo Approach (AZ/Majority Rule): Foreseeable Zone of Danger. Standard of Care Page | 127 of 153

2.

(a) Reasonable Person Standard: (objective) whether a reasonable person would act in this manner. (i) Only Defendants physical characteristics will be taken into account. (b) Child Standard: What would a child of like age, intelligence and experience do? (i) Children under 4 years old are incapable of negligence. (ii) Children engaged in adult activity: use reasonable person standard (e.g. child flying plane) (c) Professional Standard: a reasonable professional in the same or similar community. (i) We take experience into account. (ii) AZ: community is the State. (d) Common Carriers and Innkeepers Standard: liable for even slight negligence to a passenger or guest. (e) Owner-Occupier (i) First: Privity: D must be owner or occupier of land, or is in privity with one (e.g. family member who live in the house, employees who work in the building). (ii) Second: On Land: Injury must be on land of D. (iii) Third: Activity or Dangerous Condition: If injury is not due to a condition on the land, use reasonable person standard (e.g. if activity, status of P does not matter). (iv) Fourth: If dangerous condition, look towards type of P. Trespasser: Undiscovered: There is no duty to an undiscovered trespasser (e.g. thieves or hitchhikers). Discovered: defendant will be liable for artificial conditions known to the defendant involving a risk of serious injury.

Infant Trespasser / Attractive Nuisance Doctrine: child must be

able to show that he did not understand the risk involved. Must understand and appreciate the risk, cannot just see and read. This is a fact for a jury to determine. In AZ, must be under 14 years old to apply the doctrine. (Note: despite title, this has nothing to do with being attracted to the land). Feasible Alternatives: If there is a feasible alternative that could have cured the risk involved, it should have been done, and a warning will not insulate them. Licensee (on the land for Ps own purpose, includes social guests) Defendant is liable for all known dangerous conditions (artificial and natural). Invitee (on the land by express or implied invitation for the Ds purpose or benefit): It is not necessary that P has to be on the land for the purposes of Ds business, but may be for the convenience or arise out of the necessities of others who are themselves upon the land for such a purpose. D is liable for all dangerous conditions (artificial and natural) they knew or should have known of. (e.g. hotel meets duty when advising guests as to safety when hurricane causes flooding). Duties Duty to warn of non-obvious dangerous conditions No liability for very obvious dangerous conditions, unless in AZ. Page | 128 of 153

Duty to make reasonable inspection of the property.

(v) Defense: Liability excused if D (1) adequately warns of or (2) makes safe dangerous conditions. (f) Statutory Standards: Where a standard of care is established by a statute with a criminal penalty, the plaintiff may use an unexcused violation of the statute to establish duty and breach. (i) Statutory Standards apply when: The Plaintiff falls within the protected class; and The statute is designed to prevent this type of harm. (ii) Effect of Statute Being Inapplicable: Then apply reasonable person standard of care to determine whether there was negligent conduct. (iii) Effect of Person Not Complying with Applicable Statute: results in negligence per se. Negligence Per Se: conclusive presumption of negligent conduct of the plaintiff - but not liability for negligence; must show that conduct caused actual damages. Exceptions (i.e. not negligent conduct) Compliance would be more dangerous (e.g. drives on wrong side of road violating statute, but does so to avoid firetruck) Compliance would be impossible (e.g. blind pedestrian crosses against light). (iv) Compliance with a statute does not establish due care (e.g. drives 55mph in a 55mph speed zone during a raging blizzard). Often comes up as defense. To use statute as defense, D must show that (1) complied with statute, (2) that complying demonstrated due care. Duty Problems (a) Negligent Infliction of Emotional Distress (i) Plaintiff must suffer actual physical injury (compare to intentional infliction, which does not require physical injury); No Need of Physical Exception: false misrepresentation of death, or mishandling of corpse. (ii) Must be in the target zone of defendants negligent conduct (e.g. not watching from across the street). (iii) Modern Trend (AZ): P can recover if (1) close relative and (2) perceived injury (e.g. mom seeks child struck by negligent driver and has heart attack). (b) Affirmative Duty to Act: There is no affirmative duty to act, except when: (i) Special Relationship Between the Parties: Family members, employer/employee, common carriers/passengers, innkeepers/guests (ii) Duty to Control Third Persons: Requires (1) right and ability to control, and (2) know or should know to do something (e.g. parent knew kid was a bully, and didnt control kid who beat the crap out of another kid). (iii) Assumption of Duty to Act by Acting. (iv) Plaintiffs Peril is Due to Defendants Negligence (e.g. hit someone with car, but leaves them to die). B. Breach: a breach occurs when the Ds conduct falls below the applicable standard of care. 1. Negligence Per Se (see above) 2. Res Ipsa Loquitur: used when plaintiff does not have enough hard evidence to show breach. (a) Probability Inference Test: (i) This would not usually happen unless someone was negligent; and Page | 129 of 153

3.

(ii) The instrumentality causing the injury was in the defendants exclusive control. (AZ: control need not be exclusive). (iii) The plaintiff is not contributorily negligent. (b) Thereby, the jury draws inference of negligence. (c) Results: The plaintiff does not win, but will survive a motion for directed verdict and it will then go to the jury with an inference of negligence to be accepted or rejected. D need not offer evidence to refer the inference; the jury can decide. C. Causation: Actual and Proximate: 1. Actual Cause (aka Causation in Fact): P must establish that D was the actual cause of her damages. But for . P would not have been injured (a) But for Test: but for the defendants conduct would this injury have occurred? If there is only a strong probability that his conduct was the cause, but not actual, then apply the following test. (b) Substantial Factor Test: Defendants conduct was a substantial factor in causing injury - injury could have been caused by either one of the two people alone or together (e.g. two people pour water making it slippery). (c) Alternative Causes Test: When two or more negligent defendants, but plaintiff is uncertain who caused injury and only one of two people could have caused the injury (e.g. shot gun). The burden is shifted to the defendants to show who did not cause injury. Proximate Cause (aka Legal Causation): Proximate cause requires foreseeable injury occur in a foreseeable manner. (a) Egg-Shell Plaintiff: take the P as you find him; it is only necessary to foresee an injury, not the result of the injury. Exam Language: You do not need to foresee the extent of the injury/damages.

2.

IX.

(b) Direct v. Indirect Cause: uninterrupted chain of events between negligent act and injury v. there was an intervening force which combined with negligent act caused the injury. (i) In an indirect cause case, if the intervening force was an unforeseeable intentional tort or crime, the defendant will prevail even though the result was foreseeable. D. Damages 1. Nominal Damages: A prima facie case of negligence requires damage to a plaintiffs person or property. Damages are not presumed in negligence cases; there must be actual harm or injury. 2. Punitive Damages: Punitive damages are recoverable only if the defendants conduct was reckless, malicious, or willful and wanton. 3. Property: Defendant must take property as he found it (e.g. doesnt matter if Pinto or Mercedes car) 4. Mitigation: There is a duty to mitigate damages. 5. Collateral Source Rule: damages are not reduced because of payment from other sources (e.g. health insurance). Defenses A. Contributory Negligence: Defense used by D that P negligently contributes to accident. 1. Contributory Negligence State: Any contributory negligence completely bars recovery. (a) Last Clear Chance Doctrine: A contributorily negligent P contends that after their negligence, the defendant still had the last clear chance to avoid the accident, thus contributory negligence should be disregarded as a defense. (b) Implied Assumption of the Risk: The plaintiff (1) knew of the risk and (2) voluntarily proceeded in the face of the known risk (e.g. run across the street to avoid a speeding car). (i) Exceptions/Defense: (1) No other viable alternative (e.g. even though dangerous, there was no other exit) (2) Emergency of plaintiff or another (e.g. jumps in front of car to save child). (c) D was Reckless, not Merely Negligent: contributory negligence not a defense for D (e.g. apparently drunk driving is not reckless, but negligent). B. Comparative Negligence: Page | 130 of 153

1.

Pure Comparative Negligence State (Arizona): contributory negligence reduces the amount of

recovery. (a) Does not matter whether P knew or didnt know of the risk which he contributed to (e.g. assumed the risk). (b) Does not apply Last Clear Chance Doctrine (c) D was Reckless, not Merely Negligent: contributory negligence will still offset the award. Partial Comparative Negligence State: Recovery is barred if P was more negligent than D (e.g. P loses if 51% or more). (a) If there are multiple defendants, each is compared with the addition of the other Ds (not individually) (b) Does not matter whether P knew or didnt know of the risk which he contributed to (e.g. assumed the risk). (c) Does not apply Last Clear Chance Doctrine (d) D was Reckless, not Merely Negligent: contributory negligence will still offset the award.

2.

X.

Strict Liability (Liability Without Fault): (1) Duty: Under SC, D has an absolute duty to make safe (2) Breach (3) Causation (4) Damages A. Common Arenas of Strict Liability 1. Animals: (a) Non-Domesticated Animals with Dangerous Propensities (i) Strict liability Always (b) Domesticated Animals: (i) Strict Liability for domestic pets only on second instances (e.g. first bite free). Meaning, a P cannot recover for injuries inflicted by landowners abnormally dangerous domestic animals in the absence of negligence. Exception: Dog Bite Statute (AZ, not MBE)- even with first bite, owner is liable. 2. Ultra-Hazardous Activities (e.g., blasting): Strict Liability regardless of amount of safety precautions taken (e.g. Super-Careful defendant pattern) (a) Remember: fault of -D- are not important in strict liability watch out for alternative of Ds conduct. Products Liability (See below)

3.

B.

Effect of Negligence of Plaintiff on Strict Liability 1. Contributory Negligence Jurisdiction (a) Knowing contributory negligence is a complete defense and P will recover nothing (e.g. assumption of the risk). (b) Unknowing contributory negligence is no defense, the P recovers everything and D is strictly liable. 2. Comparative Negligence Jurisdiction: (a) Both knowing and unknowing contributory negligence can be asserted against Ps recovery. They recover what they would have recovered under that states comparative negligence rules. 3. Arizona (a) Knowing contributory negligence will reduce the amount P can recover under Pure Comparative Negligence Standards. (b) Unknowing contributory negligence is no defense, the P recovers everything.

XI.

Products Liability: To recover under a strict liability theory, P must show a strict duty owed by the supplied of the product, breach of the duty, causation and damages. P must show that the product was defective and reach the P without substantial alteration. A. First: Defect causing the injury existed at the time the product left that Ds control. 1. If P got product from 3rd Party: inference will be made that the defect existed when it left Ds control if the defect has moved through normal channels of distribution. Second: P proves a theory of liability (Negligence, Strict, or Warranty Liability): Page | 131 of 153

B.

1.

2.

3.

Negligence: focus is on Ds conduct, and whether he failed to act with ordinary reasonable care. (a) Conduct: (i) Negligent design (all products are incorrectly made); (ii) Negligent manufacturing (only this one was made incorrectly); (iii) Negligent warnings; (iv) Negligent inspection. (b) Plaintiffs: anyone who is within foreseeable zone of risk including bystanders. (c) Defendants: (i) Manufacturers (almost always) (ii) Wholesalers/Retailers (almost never). (iii) A building may be considered a product for strict liability purposes. Strict Liability: focus is not on Ds conduct, but whether P is foreseeable P, and whether P created an unreasonably dangerous condition which caused the injury rather than the product. (a) Plaintiffs: anyone within foreseeable zone of risk, including bystanders. (b) Defendants: everyone, but indemnification applies. Warranty Liability: form of strict liability. Where a seller or supplier makes an affirmation of fact or promise to a buyer relating to the goods that become part of the basis of the bargain. (a) Implied Warranty of Merchantability: implied in a sale by a merchant who deals in goods of this kind sold.

Exam Favorites: 1. Warnings: Adequate warnings generally insulate from product liability. (a) Feasible Alternatives: If there is a feasible alternative that could have cured the defect for a minor amount of money relative to the risk involved, it should have been done, and a warning will not insulate them. (b) Use: product strict liability is not available for a products used incidental to the support of a service. (e.g. operation uses defective blood). However, product negligent liability (showing fault) is still available. XII. Nuisance A. Private Nuisance: Substantial, unreasonable interferences with ones use and enjoyment of land. 1. Plaintiffs: must either have possession or immediate right to possession. (a) Need not own property first in time before nuisance existed. (Question will read plaintiff cannot come to the nuisance and maintain the lawsuit.) 2. Conduct: must be objectionable to an average person (objective test standard) (e.g. not a nuisance if dogs bothered by dog whistle blowing). B. Public Nuisance: Act which unreasonably interferes with health, safety or property rights of the community. 1. Plaintiffs: Private persons may recover only if they have suffered unique damage, not suffered by the public. 2. Conduct: must be objectionable to an average person (objective test standard). C. Exam Favorites: Always Pick: nuisance involves the balancing of competing interests. C. XIII. Vicarious Liability (Liability is for Anothers Torts) A. Respondeat Superior 1. Rule: Employers are liable for torts of employees committed within the scope of their employment (including a minor detour but not frolic). Look to direct liability of employer as well. (a) Independent Contractors: principal is not liable for torts of agent who is independent contractor. IC is an agent who is engaged in a distinct business, controls the manner and method by which she performs her tasks, is hired to do a particular job, supplied her own tools, paid for specific job, and is hired short term (e.g. painter who is painting a home). (b) Partnerships: each member of a partnership business is vicariously liable for the torts of each member as long as it is within the scope of the business. 2. Intentional Torts: are not within the scope of employment, except when the: (a) Force is authorized, (b) Friction is generated by this type of employment, (c) Employee is trying to further employers business. B. Automobile Owners/Drivers 1. Automobile owners are not vicarious liable for the torts of other drivers, except when: (a) Family Car Doctrine (AZ): immediate household family members using with permission (e.g. not girlfriend). (b) Permissive Use Doctrine: Anyone using with permission. Page | 132 of 153

C. D.

Parents/Children: Parents are not vicariously liable for the torts of their kids. State Statute Exceptions: there cannot be vicarious liability for intentional torts; however, some statutes that allow vicarious liability for intentional torts up to a limited dollar amount (e.g. AZ allows up to $10K).

XIV. Multiple Defendants A. Releases: do not release other tortfeasors, unless expressly done. B. Joint and Several Liability: when multiple acts cause an indivisible injury, each defendant will be potentially liable for the entire judgment amount. (Not in AZ) C. Contribution: when Ds are more or less equally responsible, they will share the judgment amount equally. 1. Other D must also be liable and not have independent defense (e.g. intra-family tort immunity) 2. Not applicable to intentional torts D. Indemnification: allows one Defendant to get paid back all they have paid from other Ds, if: 1. The other D is much more responsible; 2. Liable under vicarious liability; 3. Strict liability in Products Liability cases; 4. By contract. E. Comparative Contribution (Arizona): Defendants will split the judgment according to their relative fault. (e.g. 25% & 75% of $100K = $25K and $75K). Therefore, eliminates need for contribution or indemnification. XV. Survival and Wrongful Death: These are derivative recoveries. Plaintiff will stand in no better position than decedent would have if she lived. Recovery will depend on contributory vs. comparative negligence jurisdiction. XVI. Tort Immunities A. Gone: There are no longer intra-family or charitable immunities. B. Gone in AZ But Still on MBE: Governmental Immunity is available for government functions, but not for proprietary functions (proprietary can is identified if it is something that is normally done by private business).

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Trusts I. Introduction A. Trust: an arrangement where trustee holds legal title to property for the benefit of beneficiaries. 1. Trustee has burdens, and beneficiaries have benefits of property ownership 2. Trustee is subject to fiduciary standards; he is not privileged to use trust property as his own; harsh self-dealing rules preclude him from doing so B. Trust can be created during the lifetime of the settler or after his/her passing 1. Inter Vivos Trust: created during the lifetime of the settler 2. Testamentary Trust: created on death Parties: 1. Settlor/Grantor/Trustor: person who creates a trust 2. Trustee: third party who helps create the trust; may have single or co trustee, can be person or company 3. Declaration of Trust: where the person who is creating the trust is also acting as trustee 4. Trust Agreement: third party is acting as the initial trustee 5. Fiduciary: the trustee has a fiduciary duty to the beneficiaries, but not to the settler 6. Appointed: if the settlor dies and does not appoint a trustee, the court will create 7. Beneficiary: person who benefits from the trust, and has interested in the trust income, or right to trust principle (corpus)

C.

II.

Requirements: A. The creator must deliver legal title of the trust assets (res) to the trustee for the benefit of the beneficiaries with the intent of creating a trust for a valid purpose. 1. Settlor: (a) legal capacity - higher capacity than for wills (b) Over 18 2. Delivery: (a) Not applicable to Testamentary trust or self-declaration of trust (I declare myself as trustee) (b) Delivery is required (c) Intent to Transfer legal title is required 3. Trust Property: (a) Certain an Identifiable is required thus property must be segrageted and delivered (b) Exception Consideration for the promise to hold property in trust is ok: Consideration Paid: then by K, the trust duties attach when the property is received 4. Trustee (a) Legal Capacity (b) Over 18 (c) Capacity to contract and to execute a deed (d) No trust fails for lack of Trustee (e) Acceptance: 1) by signature; 2) by Conduct (f) May inspect before accepting to avoid liability (g) Removal of trustee: (i) Hostility between trustee and beneficiaries IF trustees ability to do his job is significantly impaired. (ii) Serious breach (iii) Lack of cooperation amongst co-trustees if impair administration (iv) Unfitness, unwillingness, or failure to administer (v) Substantial change of circumstances making removal in beneficiaries best interest (h) If trustee has no powers to perform, then no trust arises (i) To have a spendthrift trust, you must first have a trust. 5. Beneficiaries (a) Non-charitable trust: (i) Definite and ascertainable and interest must vest, if all, within RAP period; (ii) Oral testimony not admissible to I.D. beneficiary u need to I.D. in instrument; (iii) Class Gifts are valid Intestacy statutes may be consulted to I.D. beneficiaries (b) Charitable trust: (i) Only need a Charitable purpose 6. Intent to Create a Trust Page | 134 of 153

(a) Precatory: Non-binding (b) Enforceable Obligation 7. Lawful Purpose (a) Cannot be against public Policy (b) Total Restraint on Marriage Invalid; Partial restraint okay B. Intent and Valid Purpose: Valid trust must have the intent to be trust and be for a valid purpose. Is the language precatory (non-binding suggestion), or does it impose an enforceable obligation? 1. Intent: Evidenced intent of settlor to transfer legal title to 3rd party (a) Precatory Language: (i) that which does not bind beneficiary or have legal effect (ii) e.g., I give $1K to X and I wish he use it for school. X doesnt have to so use the money. (iii) e.g., I would like executor to give $1K to X. Executor doesnt have to (b) No particular words (buzz words) are needed to create trust. All that is required is intent. 2. Valid (Lawful) Purpose: (a) Provisions encouraging divorce, commission of crimes and provisions restraining the free practice of religion will be dropped from the trust. If unlawful, just strike the condition and strike the trust, thus someone may take free of condition and free of trust. (i) Restraints On Marriage: (1) total restraint on marriage is not valid. (2) partial restraint is valid if reasonable, (3) a restraint on remarriage is valid (by one spouse to surviving spouse) if it is reasonable (4) restraint is unreasonable if the limit makes the marriage unlikely or occur (5) cannot encourage marriage. (ii) Race: usually permissible as along lines of above. (iii) Religion: (e.g. cult) almost no restriction on religion violates public policy, and is therefore usually permissible. (iv) Co-Habitation: to have a restriction on co-habitation - there must be a definition of what is co-habitation. (v) Divorce: cannot place condition requiring divorce - because it violates public policy (same goes for limits on a person seeing another). (vi) Family: A will or trust provision is ordinarily invalid if it is intended or tends to encourage disruption of a family relationship (e.g. Provision demanding that siblings not be in contact is a violation NOT OK) (e.g. Provision demanding surviving spouse (SS) doesnt remarry NOT OK) (vii) Habits/Conduct: (e.g. require drug-testing, stop smoking, education) all restraints regarding personal conduct is valid (viii) Destruction of property: is against public policy; society suffers the debt if property is destroyed upon death. (ix) Support During Widow-hood: Okay. Delivery: There must be delivery of subject matter of the trust, with the intent to transfer legal title to the trustee. 1. Inter Vivos: (a) The property must be deeded into the trust (b) title the items in the trust in the beneficiary's name (c) inter-vivos trust with 3rd party as trustee there must be delivery of the subject matter of the trust) This requirement doesnt apply to self-declaration of trust (I hereby declare myself trustee) 2. Testamentary: the delivery requirement does not apply to testamentary trusts. (a) When a promise to create a trust is gratuitous (no consideration), a trust arises when all elements of a valid trust have been met, but only if, at that subsequent time the settler manifests an intention then to create the trust. (b) If a promise to hold property to be received in the future in trust is supported by consideration, under contract principles the trust automatically attaches when the property is received. The Res: To have a valid trust, legal title to a specific interest in property must be conveyed to the trustee. The subject matter of the trust must be certain and identifiable. Valid trust must have a certain and identifiable subject matter (aka the Res) 1. There must be a specific interest in property to which the trustees duties relate (i.e., such that the beneficiary who is dissatisfied can say you are not doing your job with respect to the assets) Page | 135 of 153

C.

D.

2. Expectancy in property ripens to a property interest upon death of the testator and probate of the will. 3. If T dies, although the estate has not yet been distributed, a legatee has more than mere expectancy, show has an interest which may be the subject matter of a trust or gift. 4. An otherwise empty trust is valid if it is named as the direct beneficiary of a pension plan death benefit or life insurance policy. (a) Arizona: a settlor may also create an empty trust and name it as the direct beneficiary of his will 5. An interest in someone elses will may be the subject matter of a trust, even before the will is distributed (a) Where T has died and named X as a legatee, X has more than a mere expectancy she has an interest; X may create a trust and name her interest as the subject matter, even though the amount she will receive has yet to be ascertained 6. Pour Over Will: Will says anything that is in my residuary estate upon death, should be titled to the beneficiary, and transferred into already existing inter vivos trust trust (a) Rationale: Unifying trusts; transfer assets that are in the probate estate to the revocable trust (b) Language: won't say "pour over will" will say transfer remaining xyz into trust. E. Trustee: Valid trust must have a trustee. 1. Trustee must have legal capacity to deal with the property (must be over age 18; must have capacity to contract and to execute a deed). 2. No Trust ever Fails for Want of a Trustee: If the intention to create a trust is clearly manifested but no trustee is named, or the named trustee dies or resigns with no provision for a successor, the court will appoint a suitable trustee (a) Powers Personal to Named Trustee: BUT, if the court finds the settlor intended the named trustee to not have a successor (and the trust should fail if he is no longer available) then the trust will terminate; this exception is rarely invoked 3. Acceptance: (a) Trustees signature, signifying acceptance of the trust. (b) Acceptance by conduct. (c) Note: the person designated as trustee may, wiothout accepting the trusteeship, inspect trust property to determine potential liability under environmental law. 4. Removal: A trustee may be removed on any one of the following grounds: (a) Commission of a serious breach of trust (b) Lack of cooperation among cotrustees that impairs administration of the trust (c) Unfitness, unwillingness, or persistant failure to effectively administer the trust; or (d) Substantial change of circumstances making removal in beneficiaries best interest 5. Duties: If named trustee has no powers or active duties to perform, then no trust. Beneficiaries: 1. Noncharitable Trust: beneficiaries must be definite and ascertainable, and their interest must vest, if at all, within period of the RAP. 2. Charitable Trusts: Opposite of above 3. Class Gifts: can be to an ascertainable class (e.g. descendants) if left to the discretion of the trustee. 4. Resulting Trust - No Longer Beneficiary: beneficiary no longer exists or condition not met; an implied reversion and the trust will revert back to the estate. 5. Exceptions: (a) Charitable Trusts: do not need to have ascertainable or identifiable beneficiaries. (i) Requirements: a charitable purpose, and for a reasonably large and unidentifiable segment of the public at large. (ii) Not Subject to RAP (iii) Cy Pres Doctrine: Reformation allowed if specific charitable purpose becomes unlawful, impracticable, wasteful, or impossible as near as possible (iv) Cannot benefit identified individuals. (b) Honorary Trusts: Page | 136 of 153

F.

(i) A trust with neither a person nor a charity as beneficiary; (ii) Normally void for lack of beneficiary, but exceptions are made for care of pets, and for cemetery plot maintenance (iii) Trusts must be willing to Accept duties (iv) Beneficiary = Object: Valid for 21 years. 6. Trustee = Beneficiary: normally not allowed; okay if: (a) two trustees, or (b) 2+ beneficiaries (even though the sole trustee is one of the beneficiaries) III. Trusts as Valid Will Substitutes - Revocable Trusts and Bank Account Trusts A. Definitions: 1. Revocable Trusts: (a) can be revoked or changed by the settler unless the trust provides it is irrevocable. (b) Conservator can revoke or amend if authorized by the trust instrument and court approval. (c) Durable Power of Attorney: An agent under a durable power of attorney can revoke or amend a revocable trust only if authorized by the trusts terms or by the power of attorney. 2. Irrevocable Trust: cannot be changed by the settler 3. Joint Trust: says what happens on the passing of the first spouse, and what happens on the passing of the second spouse. B. Revocable Trusts: 1. A gift by will to a revocable trust is also valid. Only requirements are: (a) Trust must be identified in Ts will, and (b) Its terms must be set out in a written instrument (c) property is added to trust as it exists at Ts death (d) The instrument may be executed before, concurrently with, or after the will 2. Pourover Will: (a) The testamentary gift to the trust, called a pourover will, provides a means for adding testamentary assets to a trust created by the testator during lifetime. Such a pourover gift is valid: (i) Even if trust is subject to revocation and amendment and is later amended (ii) Even if trust is unfunded (iii) The trust need not be in existence before or executed concurrently with will, it an be created after the will is signed. 3. Contesting A revocable Trust: - Action must be brought within the earlier of (a) 2 yrs after the Settlors death OR (b) within 120 days after the trustee sends the person a copy of the trust instrument, the trustees name and address, and a notice of the time allowed for contesting the trust. C. Totten Trust: ("Payable on Death" account) upon the settlor's death, whatever is in account will pass to a named beneficiary. FORM: "depositor, in trust for beneficiary." 1. Revocable during life by any manifestations of intent to revoke, including withdrawals. 2. Reachable by the depositors creditors during life and it may also be reached after death to satisfy any insufficiencies to creditors. 3. Extrinsic evidence is admissible to show a trust was not intended despite the designation on the signature card. 4. If beneficiary predeceases the depositor, see if anti-lapse statute applies. If it does not, it will revert to estate. Oral Trusts A. Inter Vivos Trusts (Living trust -- created by settlor while still alive): 1. Oral trusts of personal property are enforceable 2. Trusts containing land must be evidenced by a writing that satisfies the Statute of Frauds. B. Constructive Trusts: imposed to prevent unjust enrichment (equitable order by the court) 1. Not a trust. 2. Elements: (a) Wrongful Conduct and (i) fraud in inducement (orally promised, but never had an intention to do so) or Page | 137 of 153

IV.

(ii) a breach of a confidential relationship between the grantee and trustee (e.g., attorney-clients, husband-wife, father-child). (b) Unjust enrichment 3. Slayer statute: non constructive trust analysis is needed (a) Killer fofeits interest in Victims ests if he feloniously and intentionally kills. (b) Estate is distributed as though killer predeceased the victim. (c) Standard: Preponderance C. Oral promises supported by consideration to make a person a devisee in a will are not enforceable. 1. Remedy is to sue in quantum meruit for value of consideration given. D. Testamentary Trusts: created by a will. 1. Secret Trust: When T devises all of his property by will to X, but makes oral promise to Y that X will hold the property in trust for Y. (a) A constructive trust will be implied for Ys benefit, to prevent unjust enrichment, if she can establish Ts promise by clear & convincing evidence. (b) Since it is a will and not a deed, the SOF does not apply 2. Semi-Secret Trust: T devises property in will to a trust, with only an oral agreement as to who the beneficiaries are. V. Alienability and Creditors Rights A beneficiary can transfer or assign her interest in a trust UNLESS the turst is a spendthrift trust. A. Spendthrift Trust: 1. Created for a beneficiary (often because he or she is unable to control spending) that gives an independent trustee full authority to make decisions as to how the trust funds may be spent. (a) Example: (i) No interest of any beneficiary herein shall be assigneable by such beneficiary nor shall it be subject to the claims of the beneficiarys creditors by attachment or other legal process. (b) Exceptions: (i) Claims for Necessaries(food, clothing, shelter, medical). (ii) Child support obligations. (iii) Claims by the U.S. or a State Federal Tax liens (iv) Any interest retained by Settlor 2. Creditors of the beneficiary generally cannot reach the funds. (a) But, when a trust is made to benefit the settler (i.e., settler is also the beneficiary): (i) Spendthrift clauses are unenforceable; creditors can reach any right to distributions settler has in the trust (ii) Creditors may also reach the actual trust property if settlor has the power to revoke the trust (they may force him to revoke it), OR (iii) If the Trustee has authority to make distributions to settlor, creditors may force the Trustee to do so. (b) With irrevocable trusts for third persons, the settlors creditors have no rights (i) Exception: Fraudulent Transfers Doctrine If settlor creates a trust with the intent of defeating creditors, the trust can be set aside. 3. Trustees cannot stop distributing income in an income-trust. 4. Estoppel: (a) Beneficiary who participates with a Trustee in a breach of the Trustees fiduciary duties is estopped from suing. B. Discretionary Support Trusts 1. When the trustee exercises his discretionary power to distribute the principal to the income beneficiary for the beneficiarys support, the Trustee must take into account other resources available to the beneficiary. (a) Presumption in Favor of Trustee: The trustee can decline distribution if the beneficiary has other resources of income. Trust Administration A. Duty of Loyalty: No Self-Dealing by a Fiduciary 1. cannot buy or sell trust assets 2. cannot borrow trust funds 3. cannot sell assets from one trust to another trust. Page | 138 of 153

VI.

4. Corporate trustee cannot purchase its own stock as a trust investment. (a) Prudent Investor Exception: can retain its own stock if part of the original res, if it meets the prudent investor standard.) B. Duty to Invest Prudently 1. The Prudent Investor Rule: (i) Under the uniform Prudent Investor Act, invest for total return. Prudence is measured by conduct in making investment decision at time investment is made, not by hindsight baed on outcome or performance. Under Uniform Principal and income act, trustee can exercise adjustment power in favor of income beneficiary where appropriate, and can allocate principal and capital gains to income. 2. Exculpatory clauses: Okay 3. Trustee Powers: (a) If FS owner can do it, so can Trustee (b) Model Answer: The Uniform Trust Code, which applies to all trusts except to the extent the trustees powers are expanded or lmited by the Settlor, gives broad fiduciary powers. Specifically, the trust code expressly authorizes a trustee to (do whatever the question involves) (c) Exceptions: (i) Imprudent Investor Rule (ii) Self Dealing. C. Other duties: 1. Duty to preserve and protect trust property (a) Trustee must insure property against casualty losses 2. Duty of impartiality (a) Absent contrary provision in the trust, the Trustee must be fair and impartial to all beneficiaries 3. Duty to Account and Inform (a) Trustee must account periodically to the beneficiaries and keep them reasonably informed about the administration of the trust

D. Powers of the Trustee and Successor Trustees: 1. Corporate trustee may take title to stock in name of nominee, but trustee remains liable for acts of nominee 2. Trustee may invest in common trust funds (accounts created by corporate trust companies where smaller trusts are combined for greater diversity of investment) this is not a breach for commingling 3. When several co-trustees are appointed, they must act by majority rule not unanimously. E. Liability for Breach of Trust, Torts and Contracts 1. When a Trustee breaches his fiduciary duties (self-dealing, improper investment, etc.) the beneficiaries can choose to: (a) Ratify the transaction and waive the breach, (b) Sue the Trustee for the resulting loss (This action is called a surcharge) (i) Good faith, reasonableness is no defense (ii) The only issue is measure of damages (c) If self-dealing case, beneficiary can trace and recover the property for the trust (i) If value of purchased property increases, beneficiary can claim the property for the trust 2. Co-trustees are only liable for their fellow trustees breach if there is an element of fault, i.e., they: (a) Participate in the breach, (b) Fail to use reasonable care to prevent it, or (c) Fail to take proper steps to compel the co-trustee to remedy the breach 3. Can a Trustee delegate his duties? (a) A Trustee may delegate investment decisions to an agent, but only if he exercises reasonable care, skill and caution in: (i) Selecting the agent, (ii) Defining the scope and terms of the delegation, and (iii) Periodically reviewing the agents actions and decisions Page | 139 of 153

(b) Simply notifying beneficiary of the delegation does not waive beneficiarys right to sue for agents mistakes (i) T is still liable unless beneficiary gives affirmative consent (c) Related Rule: As long as a trust is revocable, a trustee who acts with the consent of the settlor cannot be sued for breach by the beneficiaries 4. Tort: (a) A 3rd party may sue the estate for torts committed by the Trustee or his agent; the Trustee is not personally liable unless he was personally at fault. (i) If 3rd party sues the trust, the beneficiaries may surcharge the trustee 5. Contract: (a) A 3rd party can sue on contracts entered into by a Trustee by proceeding against the trust (suing the trustee in his representative capacity). The Trustee may be sued personally if he failed to reveal his representative capacity and identify the trust. (b) Either way, indemnification rights exists between the trust and trustee, so if the K was a breach f trust, trustee is personally liable; if it was not, trust itself is liable 6. Remedy: (a) Bring action to remove trustee (b) Ratify the transaction and waive the breach (c) Sue for resulting loss in a surcharge action. If self-dealing, under the no further inquiry rule breach of a fiduciary duty is an automatic wrong; good faith reasonableness is no defense. Only issue is damages (d) Statue of Limitations: (i) Against Trustee: 1 year if trustee gives beneficiary a report accounting that discloses the facts that show existence of a potential breach of trust, and informs beneficiary of the time allowed for commencing an action. (ii) IN all other cases, 5 years after the first to occur: Trustees removal, resignation, or death Termination of beneficiary trust interest, or Termination of trust. (e) BFPs Are Protected (f) BFP that is a relative is not protected from indirect self dealing. F. Trust Accounting 1. Income beneficiaries get the net income, while the remaindermen are entitled to trust corpus at the termination of the trust 2. Thus, receipts and expenditures must be allocated to the correct account: income or principal (corpus) (a) Receipts: (i) Income: interest, rents, stock dividends paid in cash 10% of any annuities, or mineral royalties (ii) Principal: Proceeds from sale of trust assets; stock splits; dividends paid in stock (b) Expenditures: (i) Ordinary expenses incurred in the production of income (repairs, interest and taxes) are charged to income account (ii) Extraordinary items, capital improvements and income taxes incurred on sale of trust property are charged to principal account (iii) Trustee fee is split equally between income & principal accounts 3. Power to Adjust (a) Under the Revised Uniform Principal & Income Act, trustee has the power to adjust the normal classification rules (e.g., classify some capital gain as income instead of principal) if necessary to comply with his duty of impartiality VII. (Early) Termination of Trusts A. Unanticipated Circumstances: 1. On petition of the trustee or a beneficiary, court may modify or terminate trust if, because of circumstances not anticipated by the Settlor, modification or termination wil further the purpose of the trust. B. Consent of Trustee and Qualified Beneficiaries: 1. Modification must not be inconsistent with a material trust purpose Page | 140 of 153

2. Qualified Beneficiaries: those who are 1) permissible distributes of trust income and principal, or 2) would be distributes if the trust terminated on that date. C. Uneconomic Trust 1. If value of trust is less than 100K, upon giving notice to qualified beneficiaries the trustee may terminate without court approval if the trustee concludes that the trusts value is insufficient to justify the administration costs D. Reformation To correct Mistake or Achieve Tax Benefit: 1. Judicial proceeding requiring. 2. Clear and Convincing evidence E. Claflin Doctrine: Beneficiaries can force early termination if: 1. All beneficiaries consent, and (a) ALL beneficiaries must consent; if there is an interest in minors or unborn beneficiaries, trust may not be terminated 2. There is no further trust purpose to be served. F. A Spendthrift clause makes the trust indestructible (beneficiaries may not terminate), unless the settlor and ALL beneficiaries consent. G. A settlor acting alone can terminate or modify a trust if he: 1. has expressly reserved the right to revoke, and 2. he complies with all the provisions in the trust pertaining to the form of revocation. VIII. Trusts Imposed by Operation of Law A. Resulting Trusts 1. May arise when: (a) express trust fails, or (b) when trusts purpose is accomplished and corpus is not exhausted 2. Examples: (a) Semi-secret trust case under Majority rule (b) Trust of $10M to build hospital wing, but it is build for $8M and trust is silent as to this contingency; Extra $2M may be returned to settlor by resulting trust (c) Express trust fails for any reason and trust is silent as to what happens in such an event B. Purchase Money Resulting Trust PMRT: 1. Presumed to arise when consideration for purchase of property is paid by person other than person taking title - PRMT 2. Person taking title might claim defenses of gift or loan or rebut presumption (a) Gift is presumed when the person giving gift is a close family relation to title holder. C. BFPs: If trustee sells or exchanges a resulting or constructive trust to a BFP for value, the beneficiarys rights to the transferred asset are cut off. 1. BUT, trustee holds any consideration received on the transfer in trust for beneficiary, AND 2. If the sale is not to a BFP, the beneficiary has a choice of remedies: (a) impose a trust on the consideration received by the trustee, or (b) impose trust on original asset in non-BFPs hands D. Constructive Trusts 1. Implied in a variety of circumstances where a person acquires title to property wrongfully; Trust is implied to remedy unjust enrichment 2. Examples: (a) Title to property acquired by fraud, misrepresentation, duress, or mistake (b) Oral trust of land under limited circumstances (i.e., when SOF is not satisfied) (c) Secret Trust case (d) Semi-secret trust case (in AZ) Powers of Appointment A. When a T grants someone, in his will, the power to dispose of certain property under the will at her discretion he grants her a power of appointment. B. Two types of power of appointment: general powers, and special powers 1. General power: Appointee is not limited in the class of beneficiaries to whom she can appoint. (Appointee can appoint the money to himself.) 2. Special power: Appointee must appoint the property to a limited class of beneficiaries. C. The appointment is testamentary if limited to appointments by will. (Appointee cannot exercise her power during life only upon Ts death, according to his will). Page | 141 of 153

IX.

D. POAs creditors cannot reach this property; POA does not have an interest in it. E. Takers in Default: they will take the property on Ts death if the power of appointment is not exercised.

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Wills I. Execution of Wills A. Attested Will 1. Must be written with testamentary intent, 2. Must be 18 at the time of signing, 3. Testator must sign the will. (a) Any mark will serve as signature of intended as so (e.g., X) (b) Signature may be by another person, when at Ts direction and in Ts conscious presence. 4. Witnesses: Two persons who witnessed Ts signing and who sign the will (a) Within a reasonable time thereafter, or acknowledge his signature. (b) Arizona: Witnesses do not need to know the document is a will and can be interested parties. (i) Undue Influence: this issue arises when addressing interested parties. B. Holographic Wills: Valid if: 1. Signed by the T and 2. Material provisions are in the Ts handwriting. (a) The material provisions: (i) Identifies the Property (ii) Identifies the Beneficiary. Holographic changes to a holographic will are effective even without signature. Holographic changes to a typewritten will are not effective unless the will is re-executed. Ancillary Wills (are valid in Arizona): 1. Valid if (a) The place the will was executed gives it effect or (b) The will complies with the laws of the Ts domicile at death or (c) The will complies with the law of Ts domicile at the time of execution. Proof of Wills: 1. An uncontested will maybe accepted to probate if it appears on its face to be validly executed. 2. If contested, a formal testacy hearing is required. (a) Burden of Proof of Due Execution: (i) Proponents. (ii) Attestation Clause: Shifted to Contestants. Self-Proving Wills: Formalities of Execution as conclusively presumed if: 1. if T and witnesses sign 2. a self-proving affidavit 3. under oath 4. before a notary public

C.

D.

E.

II.

Revocation: will can be revoked by (1) Operation of law (2) by Physical Act, (2) by Subsequent Instrument. A. Revocation by Presumptions: 1. Mutilated Will Presumption: If the will is in the Ts possession from the time of execution until death and found in mutilated condition, presumption is that T mutilated with the intent to revoke. 2. Lost Will Presumption: Will last seen in the Ts possession and control, but not found after the Ts death, presumption is that the T destroyed it with intent to revoke. 3. Destruction of Copies Presumption: Revocation of one, is revocation of all copies Revocation by Physical Act 1. Requirements: (a) Intent: Must have intent to revoke and (b) Act: Perform Physical Act (burning, tearing, canceling, obliterating, or destroying). (i) Must be to the original of the will. CL: must touch typeface of the will. (ii) By: Page | 143 of 153

B.

T or by another person at Ts direction and in T's conscious presence (e.g. telephone won't work).

C.

Revocation by Subsequent Instrument

1. Subsequent will may revoke in whole or in part 2. Subsequent will can revoke prior will expressly (e.g. statement in new will revoking all other wills) 3. Subsequent will can revoke a prior will by inconsistency; inconsistency is shown by: (a) A Complete Disposition of Property in New Will: Presumption that the T has revoked the prior will. HOWEVER: (b) A Partial Disposition of property in a new will: creates a presumption that the T intended to supplement the prior will (e.g. intended subsequent instrument to be codicil and only inconsistent portions are revoked.) 1. Codicils: (a) (b) Presumptions (c) rebutted by clear and convincing evidence! (d) Codicil is a will, which is an amendment to a will, but not a revocation of the amended will. Republish the will. There can be a holographic will with an attested codicil, and there can be an attested will with a holographic codicil. No requirement in Arizona for the documents to be in the same form. Residuary Clause: If there are two wills, and the second will has no residuary clause, it is presumptively a codicil to the first one. If the second will has a residuary clause, the second revokes the first in its entirety. (e) Revocation of a will, revokes all codicils thereto, but revocation of a codicil does not revoke the will.

D.

Revocation by Operation of Law 1. Dissolution of Marriage (Divorce) (a) Divorce following the execution of will revokes all provisions favoring the ex-spouse by construing the will as if the ex-spouse was dead. (b) Separation will not affect the will unless accompanies by complete property settlement. (c) JTROS real estate gets converted into TC Ask Aaron if he know what this is? 2. Will Created Prior to Marriage ????????????????? 3. Share of Omitted Child???????????????????????? 4. Devisee Misconduct ?????????????????????????? 5. Ademption By Extinction ?????????????????????? Dependent Relative Revocation (CL - Not in Arizona): 1. If testator revokes their will by mistake (law or fact), |the testator lacks proper intent to revoke | and revocation is not given effect. 2. DRR Test: Analyze intent of T by comparing and contrasting the original will, and the change made. (a) Scratching Provisions in Will: Look to whether will is attested or holographic (i) Original Will is Holographic: Additions and subtractions do not need to executed with any new formalities. Example: I give 1000K 1500k to Becker This is a valid partial revocation and valid holographic will. Example: I devise entire estate to Winston Thatcher This is a valid partial revocation and valid holographic will. (ii) Original Will is Attested: For attested wills, amendments after partial revocation must be initialed Handwriting scratch on attested will must rise to level of holographic will (codicil) (i.e., material provision in handwriting of testator and signed by testator)

E.

Example: I give 1000K 1500k to Becker 1500k scratch does not rise to level of holographic will, will is revoked by physical act (cancel). Page | 144 of 153

But, if DRR: Presumed intent is that since Ts was amount for Becker, T would rather have her take 1000K than nothing, DRR invoked.

Example: I devise entire estate to Winston Thatcher Will not work in AZ even if there are initials next to Thatcher. These changes would not change it into a valid holographic either; Muter applies only to preprinted forms, so the words here would not give context the handwritten part of the will. Scratch Out in Residue Clause: If someones name is scratched out of a residue clause, that person has been revoked from the will, even though it adds property to the other people, it is not treated as having to have the formalities of a new will.

F.

Revival: 1. When a will exists and is revoked by execution of another, then revoke the second with intention of reviving the first will; the court will revive if: (a) The first will is still in existence; (b) It was the Ts intent was to revive it; (e.g., I think I was right the first time) (c) Only applies if the second will was revoked by physical act.

III.

Incorporation by Reference (facts of independent significance) A will may incorporate an extrinsic document. Incorporation by Reference Reference to Separate List (Arizona) 1. Not Existence: Need not be in existence at time of will 2. Modified: List can be modified at any time prior to incorporation. 3. Refer: Will must refer to list 4. Tangible: Deals with listing of tangible property (i.e. not money or real estate, but clothing, jewelry, etc) 5. Handwriting or Signature: the list must be signed by the testator, or in the handwriting of the testator (e.g. It is not valid if it is just on the computer, it must be printed out and signed.) 6. Frozen: If it is incorporated by reference, the document is frozen on that date, and it could not be changed after that point. 7. Intent: Must manifest Ts intent to incorporate

1. Existence: Must be in existence at time of will 2. Intent: Must manifest Ts intent to incorporate 3. Specificity: Will must describe with specificity 4. Frozen: If it is incorporated by reference, the document is frozen on that date, and it could not be changed after that point. Form: Holographic wills may incorporate non-handwritten material by reference.

IV.

Acts of Independence Significance: A will can dispose of property by reference to acts that have lifetime significance apart from their effects on dispositions. A. Before or After: Acts can occur before or after wills execution 1. Examples: (a) I leave $$$ to the persons which I employ upon my death (depends on who is employed at the time of death) (b) I leave the contents of my cabin to my children (depends on that the contents are at the time of death) B. Problem of Property Contents: what do we do if the contents of the devise contain more than T likely intended? E.g., I give contents of my desk drawer to X. Inside, X finds keys to Porsche. (Tip: If it cannot fit in the drawer (car cannot), devisee doesnt get it). Look for Precatory Language: Precatory language in a will or trust usually includes such terms as the testator's "request," "hope," or "desire" that property be given to a certain person or be disposed of in a particular manner.

C.

V.

Lapse, Ademption and Exoneration of Liens (Time Gap Issues between Will and Changed Circumstances) A. Lapse: Page | 145 of 153

1. A devise will lapse (wont take) when a beneficiary named in the will (a) dies before T, (b) within 120 hours (5 days) after Ts death, (i) (120 Hour Rule: must survive 120 hours, except if will says unless X survives me atleast by 1-5 days) (c) Disclaims, (d) or on account of Bad Conduct. 2. Arizona Anti-Lapse Statute: However, a substitute gift can be made if: (a) Certain Relationship: Decedent and Deceased Devisee are in a certain relationship; (i) Descendent of testator (ii) Grandparent of the testator (iii) Descendent of the grandparent of the testator (iv) Stepchild (b) No Alternative Devise: There is no alternative devise in the will; (i) If the will has a residuary clause, it has an alternative devise. (c) No Words of Survivorship: there are no words of survivorship (i) If there are words of survivorship, then this does not apply, and those words will suffice alone (i.e. If he survives me, My surviving children, descendents or heirs) (d) Surviving Descendents: predeceased devisee must have surviving descendents; (i) Then: They will take by equal representation (by what the original devisee would have gotten). 3. Class Gift Rule: when a gift by will to a group of people generically described as a class and some class member pre-deceases the T, the Anti-lapse Statute doesnt apply and remaining class members take by representation. 4. Residuary: When a residuary estate is devised to two or more persons and the gift to one of them fails for any reason, the surviving residuary devisees take the remaining estate. B. Hierarchy of Gifts: 1. Types of Devises (a) Specific Devise: gift of property which can distinguished with reasonable accuracy from other parts of the estates. The testator intends for the gift to be limited to that specific item. A specific devise is a gift of a named or unidentified piece of property, real of personal, that the testator leaves to a devisee. (i) Look at: Identification: did the testator use specific words to identify the item, Possession: word of possession, e.g. "my" book Ex: Real property is usually a type of specific devise (b) General Devise: gift of personal property that the testator intends to be satisfied from the general assets of the estate (i) Ex: Sums of money (not specific items or from specific source) (ii) Ex: I devise a painting (not the, or a specific painting) (c) Demonstrative Devise: devise that the testator intends to be paid from the specific source, but if the source is not enough to pay it out, then the it is to be paid from the general assets of the estate (i) Specific-General: this is a combination of a specific and general devise Ex: I devise $500 to come out of my estate. (d) Residuary Devise: devise of the residue is the payment of everything is paid and what remains from the probate estate; (i) Payment: this is done after the attorney / administrator, statutory allowances, then creditors, then specific, general, and demonstrative devises (ii) Look For: language that says "this is a residuary" or "everything left over" (iii) If the residue is devised to two or more persons, and the share of one of them fails, for any reason, that share passes to the other residuary beneficiaries in proportion to the interest of each in the remaining part of the residue. 2. Abatement: if the estate if insufficient to satisfy all of the gifts made, the gifts at the top of the hierarchy are satisfied first. Page | 146 of 153

Goes First: Property by intestacy Residuary devises General devises Specific and Demonstrative Devises 3. Ademption: (a) CL: devise satisfied during the lifetime of the testator, and payout doesn't have to happen a second time after the death of the testator. (i) Specific Devises: Ademption only applies to specific devises (ii) Applies When: if the specifically devised property does not exist (part of the probate estate) at the time of death of testator, then it will be taken away (deemed to be extinct) and not taken into consideration (b) Specifically devised property not in the testators estate at the time of his death is adeemed of fails. Arizona, unlike CL, allows the testators intent to be considered to avoid a harsh application of the Ademption doctrine. (c) Exceptions to Ademption: (i) Arizona: if the T was declared incompetent and a conservator sold the property, the specific devisee has a right to a general legacy equal to the net sale price. Unless the Ts disability is adjudicated to have ceased and the Testator survives for one year. (ii) Any balance of the purchase price remaining at Ts death. (iii) Any unpaid amount at Ts death of a condemnation award. (iv) Any unpaid amount at Ts death of fire or casualty insurance proceeds (v) Property acquired as a result of a foreclosure of a security interest on a specifically devised note. (vi) Securities: in certain situations the original devisee gets the additional money. If testator devises securities and securities change in value or name type, devisee takes changed securities if: Successor Securities Merger, Consolidation or reorganization Dividend Reinvestment; Cash Dividends are not part of the devise (whereas the Stock Dividend is part of the devise) Note: if I devise X stock v. I devise my X stock, former is not specific and cannot be adeemed. 4. Exoneration of Liens: (a) Mortgage: subject to language in the will, the devisee takes property, even if there is a mortgage on the property, and they incur the debt (subject to). (b) A specific devisee of encumbered property is not entitled to have the encumbrance paid out of the residuary estate unless the will shows such intent. VI. Ambiguities & Mistakes A. Patent Ambiguities: clear on the face of the will. Extrinsic evidence may be used to clear up patent ambiguities. B. Latent Ambiguities: only seen when the will is applied. Extrinsic evidence may be used to clear up latent ambiguities. C. Extrinsic evidence is inadmissible to clear up mistakes (i.e. cannot disturb plain meaning of the will), unless ambiguous. Exceptions where Extrinsic Evidence Allowed in: 1. Mistakes: can be corrected (a) Personal Usage Exception: mistaken name; Mrs. Moseley was a reference to Mrs. Lillian Trimble. Extrinsic evidence permitted. (b) Middle Name (c) Address 2. Tax Advantages: not going to effect the devisees, but going to effect taxes only, it's okay

VII. Inheritance A. B. Probate Estate = Community Property + Separate Property Non-Probate Estate: 1. Joint Tenancy with Right of Survivorship 2. Community Property with Right of Survivorship 3. Life Insurance Page | 147 of 153

4. Payable-on-Death contracts (POD contracts) (a) Example: retirement account (IRA); profit sharing accounts, 401(a) or 403(b) accounts; annuities 5. Multiple Party Bank Accounts 6. Interests in Trust 7. Beneficiary Deed 8. Wrongful Death Proceeds: Does not go to the estate. Goes to (creditor cannot get to it): (a) Spouse; if not, to (b) Descendants; if not, to (c) Parents. C. Survived by Spouse: 1. community property (a) Goes to the surviving spouse. 2. other community property and separate property: (a) If D has no kids or all Ds kids are of surviving spouse = surviving spouse takes all (b) If D has kid who is not of surviving spouse = surviving spouse gets half of the Ds separate property; the rest goes to kid(s).

No Surviving Spouse- Remaining property passes, in order, to: 1. Ds descendants, by representation; 2. Ds parents (divided equally); 3. Descendants of Ds parents by representation; 4. Ds grandparents (divided equally); and 5. Descendants of Ds grandparents by representation. 6. Escheats to State Note: Kindred by half blood; right of inheritance: blood are considered whole blood for purposes of inheritance. Note: No great-grand parents. D. 1. English/Strict Per Stirpes (by the stocks): Division occurs at relation nearest the D, regardless of whether they are alive or dead. Divide at C level. Each C gets 1/3, drop shares down. Thus, GC1,2,3= D (1/3)/3=1/9 each C1 C2 C3 GC4 = 1/3 GC1, GC2, GC3 GC4 GC5 GC5 = 1/3 Modern/Per Capita Stirpes: Division occurs at 1st level where there are surviving descendants, and distribution is equal. Divide at GC level. GC1,2,3,4,5 = 1/5
C1 GC1, GC2, GC3 D C2 GC4 C3 GC5

2.

If instead C3 is alive & C1 has no kids, GC4 = , C3 = since C3 is alive, GC5 gets nada.

3.

By Representation (Current AZ & UPC approach): i. Distribution occurs at level that has one or more living descendants and ii. Where there are deceased descendants, aggregate their shares and allocate it among their descendants.
C1 GC1, 2, 3 D C2 GC4 C3 GC5

Divide at GC level. GC1,2,3,4,5 = 1/5 If instead C3 is alive, Divide at C level. GC1,2,3,4=(2/3)/4=1/6 each C3=1/3 (based on assumption that D wouldnt differentiate among GCs)

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This is divided according to the most recent surviving generation. If only one of a generation is surviving, then that is the generation which is used to determined shares. However, there have to be descendents of the deceased in order to allocate a share. E. Adoption 1. Adoption terminates the childs right to inherent from natural parents, but child can inherit from adoptive parents. The adopted child is included in class gifts to children. (a) Exception: adoption by the spouse of a natural parent has no effect on right to inherit from the other natural parent. 2. Equitable Adoption: (1) when there is a minor mistake in an adoption, (2) implied contract to adopt (e.g. unperformed contract). However, does not allow parents to inherit from the child. 3. Minor Caretaking (a) Guardianship (Care of Child): Becker feels this is the most important reason to have a will. A parent can designate in a will a guardian for the child if both parents die while a child is a minor. However, if the parents die while a child is a minor and their wills do not designate a guardian, the court will appoint a guardian of the person from among the nearest relatives. (i) Nominated guardian given priority (ii) If no nomination, court determines guardian in best interest of child. (iii) If child >14, court will listen to kid. Factors: Geography; Religious concerns; Better to name only one person as opposed to a couple; and Give multiple choices as contingency. (b) Conservator (Care of Property): Conservator: A guardian has not authority to deal with the child's property. If a parent dies intestate, leaving the property to a minor child, a conservator will be appointed by a court. However, a person can create a trust for the child by will, which will safe on the costly fee associated with creating a conservatorship. (i) Takes financial care of kids receiving property, because they cant take possession until >18yrs. (ii) Problems w/conservator: expensive, messy, restriction on use of funds, strict court supervision. (c) Custodian: person who is given property to whole for the benefit of a minor (d) Trust: This can postpone child taking possession of prop until maturely ready. Appoint a trustee different than guardian, to create a checks & balances system. F. Lifetime Transfers: Look to whether the transfer of money from decedent was a gift, loan, or advancement. 1. Presumptions: (a) CL: any lifetime gift to a child or descendant is presumed to be an advancement of his intestate share to be taken account in the distribution of the intestate estate. (b) Arizona: no advancement unless it is declared as such in a contemporaneous writing by the decedent or acknowledged as such in a writing by the heir. 2. Loan: (1) delivery of item; (2) no donative intent - give with intent to be paid back (e.g. evidenced by written statement to payback, consideration taken) (a) Debts: debt owed to a decedent is not charged against the intestate share or any person except the debtor. If the debtor fails to survive the decedent, the debt is not taken into account in computing the intestate share of the debtor's descendents. (i) e.g. Kid owes mom money. Mom dies, and kid is dead. The kid's kids are not obligated to pay back dead mom back, and the debt is not taken from their inheritance. 3. Gift: (1) delivery of item; (2) donative intent; (a) Ignored: Which should be ignored entirely when computing the share 4. Advancements (This is intestate. If will, then go to Ademption/Satisfaction). (a) Property that D gave to person during lifetime is to be counted against their share of the PE if: (i) Heir is living, and: (ii) D declares so in contemporaneous writing (e.g., memo line on check), or NOTE: D does not have to declare this to recipient! (iii) Heir acknowledges in writing (at any time), or Page | 149 of 153

(iv) If writing otherwise indicates that gift should be considered. (b) Advancements are valued at time heir came into possession or at time of Ds death, whichever is first. (c) Advancement Bigger than Estate Share: then the heir (and their advancement) is taken out of the mix for the purposes of computing shares. (d) Hotchpot: The value of the advancement or loan is taken into consideration in computing the share. This is called hotchpot. (i) If beneficiary is still alive, consider the loan in calculation of assets: If C1 and C2, and C2 received $100K loan, Estate=$500K plus $100K right to receive (known as a hotchpot PE + advancements). C1= $600K/2= $300K C2= $600K/2= $300K $100K loan = $200K. (ii) A debt owed to D is charged only against debtor. Debtor Predeceased: If debtor predeceases D, DO NOT consider loan in calculation of assets! If C1 and C2, and C2 received $100K loan, Estate=$500K C1= $500K/2= $250K C2 (dead, has GC1,2)= $250K/2= $125K each.

VIII. Allowances IX.

Pretermitted Family: A. Pretermitted Spouse 1. If the will was drafted before the marriage, the surviving spouse will get an intestate share, unless: (a) The omission was intentional. (b) The will states it is to be effective, not withstanding subsequent marriage. (c) Provisions made outside of the will to provide for the surviving spouse. (d) Will was republished by codicil after the marriage B. Pretermitted Children 1. A child born after the execution and is entitled to take an intestate share if no other children, or a childs share if other children, unless: (a) The omission was intentional. (b) If all of the estate was left to a parent of the pretermitted child. (c) Provisions made outside of the will to provide for the surviving child. (i) Essay: an omitted child is not entitled to an intestate share if the child was otherwise provided for outside the will and the testator intended the gift to be in lieu of a testamentary provision. (d) Will was republished by codicil after the marriage 2. Children thought to be dead: (a) CL: no relief for mistake in inducement to make or not to make a provision in a will, unless both the mistake and what would have been done but for the mistake appear in the terms of the will. (b) Arizona: if at the time of will execution, the T fails to provide in his will for a living child solely because he believes the child to be dead, the child receives an intestate share.

X.

Bars to Succession A. Fail to Support: A parent forfeits the right to inherit from a child if the parent refuses to support the child. B. Murder of the Decedent: 1. Inheritance: A person who feloniously and intentionally (must be intentional killing, e.g., DUI doesnt count) kills the decedent forfeits all benefits (regardless of will or if it was intestate). If intestacy, functions as if person had disclaimed interest. (a) Revocable benefits under a governing instrument (will, trusts, POA, POD bank accts) (b) Powers of appointment (c) Nominations to serve in fiduciary capacity (d) All joint tenancies and community properties are treated as tenancies in common 2. Disclaimer Page | 150 of 153

(a) When an heir or a devise declines to take the property or interest (e.g. I don't want this). If the heir refuses to accept the inheritance, the common law treats the heir's renunciation as if the title had passed to the heir and then from the heir to the nest intestate successor. (b) Rationale: lower taxes or keep property from creditors (c) Requirements: (i) in writing (within 9 months); (ii) must describe the property being disclaimed; (iii) must be a declaration of disclaim; (iv) signature; (v) no acceptance of the property (e.g. this must happen before they accept the property) (vi) must be delivered. (d) Not by Representation: your disclaim share is going to go down to your descendents; not going to combine shares; only the living descendants of disclaimant will take . (i) Hypo: Decedent has 2 children - C1 has 4 children, and C2 has 1 child. If C2 predeceases: go to C1 and goes to C2's child If C1 disclaims (and C2 is dead): C1s share will be split among his heirs, and C2's child will keep his share (e.g. not split 5 ways). Will not make C2's child worse off and treat it as though C1 predeceased and divide shares at the next level. (e) Previously Accepted: Disclaimer ineffective if person has already accepted it, sold it, or a judicial sale has occurred. 3. Divorce: All revocable governing instruments (life insurance, trusts, POA, POD bank accts) are revoked. (a) Prenup: a prenup will be another bar to succession 4. Elder Abuse: (a) Duty to an Incapacitated or Vulnerable Adult: a person who is in a position of trust and confidence and who by intimidation or deception knowingly takes control. (i) Can be subject to civil and criminal penalties for damages (3x amount of monetary damages) (ii) Person forfeits all benefits (same as homicide). (iii) If intestacy, functions as if person had disclaimed interest.

XI.

Will Contracts: Person may contract to make or not revoke a will, or contract to die intestate IF: A. Material: provisions of a will that states the material provisions of the contract 1. Mere existence of a joint or mutual will does not imply a contract not to revoke. (a) Joint Will: will that is the same for the two (b) Mutual Will: reciprocal where leaves everything to one another B. Express: express mention of the contract in the will or extrinsic evidence pointing there to C. Signed: a writing signed by the decedent evidencing the contract

XII. Administration of Estates: Probate Estate Pay in Order: (1) Funeral Arrangements (2) Administration: Lawyers/ Personal Representative (3) Statutory Allowances (4) Creditors (5) Balance of probate estate goes to (a) the devisees of probate estate or (b) intestacy heirs A. B. C. D. Executor / Personal Representative: person appointed by the court to carry out a will Trust: Trust is a legal relationship. Administer of Trust/ Trustee holds onto property and makes distributions to beneficiaries. 1. Trustee: is responsible for enforcing condition of trust Personal representative: Person, in AZ, who makes transfers, under will, to devisees, etc. 1. PR is a fiduciary held to high standard of conduct 2. Other states use different terms to describe this role executor, executrix 3. PR can be individual or a corporation (such as bank trust company)

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E.

Statutory Allowances and Liability to Creditors: Provides a statutory format for reaching non-probate property. If PE is insufficient to satisfy claims from creditors and statutory allowances, transferees receipt of nonprobate assets is subject to liability for those claims. 1. If PE is insufficient to satisfy claims from creditors and statutory allowances, transferees receipt of nonprobate assets is subject to liability for those claims. 2. Notice of Death of Settlor to Creditors: After settlors death, trustee may notify creditors. Claims not brought w/in time prescribed in written notice for creditors are waived. 3. Do On Sale Clause: not enforceable on the transfer of property to a trust. 4. Unknown Creditors: Publish notice in a place of the settlor, and the creditors have 4 months Not all non-probate property can be reached for statutory allowances and creditors claims. Certain property is exempt: 1. Property subject to retirement benefits 2. Life insurance 3. In Arizona, the survivorship interest in real property is protected. Taxes: 1. Estate Tax: excised tax on the right or privilege of the decedent to transfer property on his death (on the decedent's estate) 2. Inheritance Tax: tax on the recipient of the property (on the recipient) (a) Federal government does not have inheritance, it only has estate

F.

G.

XIII. Will Contests A. In Terrium (No Contest) Clauses: such clause is unenforceable if probable cause exists for contest. A no-contest clause provides that a beneficiary who contests the will shall take nothing, or a token amount, in lieu of the provisions made for the beneficiary of the will. See Estate of Shumway. B. Incapacity: 1. Level of Capacity Needed to Create: (High) Contract Gift Will Marry (Low) 2. Common Law Sound Mind Test: To invalidate a will for lack of testamentary capacity, the contestant must show that the testator lacked at least one of the following elements: (a) ability to know the nature and extent of his/her property (b) ability to know the person who are the natural objects of his/her bounty, (c) the ability to know the disposition he/she is making by this document; (d) ability to know the interrelationship of these factors as to form an orderly plan of disposition. 3. Focus On: (a) Ability: it is the ability to know these things (e.g. tax provisions) (b) Memory: a perfect memory is not an element of testamentary capacity (they just need to remember the necessary facts) (c) Size: size of the probate estate may effect the testator's ability to dispose of it (d) Required When: there must be testamentary capacity when they actually sign their name to the will. 4. Time: T must have lacked it at time of wills execution - at moment that T signs will. 5. Must Influence the Testamentary Act C. Insane Delusions: Challenges to set aside the will based on Insane Delusions 1. Insane Delusions: extravagant belief to which a person adheres against all reason and argument 2. Must Show: (a) mistake belief in a fact (fact is broadly defined) (b) the insane delusion must effect the will (must induce) (c) the mistake must not be one that is based on evidence (looks at whether a rational person would have reached the same conclusion; (d) you cannot correct their mind with evidence. Undue Influence: Challenges to set aside will based on Undue Influence 1. Undue v. Unsound if a person's will is subject to undue influence, they are considered of unsound mind. Page | 152 of 153

D.

2. Test: a person exercises undue influence over a testator when that person through his or her power over the mind of the testator makes the desires of intentions of the testator his/her own. 3. Steps (a) Proponent: the proponent of the will (seeking the probate of the will) has the initial burden of proof that it was duly executed. (b) Contestant: then burden of proof shifts to contestant; if a person seeks to contest a will based on undue influence, they then must prove by a preponderance of the evidence: (a) there was a confidential relationship between undue influence person and testator (b) person was involved in the procurement of will (c) person was a principle beneficiary of the estate (c) Proponent: if above is proved, then the burden shifts back to proponent to negate undue influence, and they must prove by clear and convincing evidence that they did not exercised undue influence. (Typically the proponent cannot prove this at the point - and loose). Wills & Trusts Essays: Validity: The facts indicate the will and trust were executed according to Arizona law and are thus valid. Trustees Duties: The trustee shall observe the standard in dealing with the trust assets that would be observed by a prudent man dealing with property of another, and if the trustee has special skills, he has a duty to use those skills. A trustee must, within a reasonable time after receiving trust assets, review the assets and carry out decisions with respect to retaining and disposing assets. The trustee must make a reasonable effort to verify facts that are relevant to the investment and management of trust assets.

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