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Business Law

Week 2 – Yoleida Villalobos 14. 2 Real Property Robert Briggs and his wife purchased a home located at 167 Lower Orchard Drive, Levittown, Pennsylvania. They made a down payment and borrowed the balance on a 30-year mortgage.

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Six years later, when Mr. and Mrs. Briggs were behind on their mortgage payments, they entered into an oral contract to sell the house to Winfield and Emma Sackett if the Sacketts would pay the three months’ arrearages on the loan and agree to make the future payments on the mortgage. Mrs. Briggs and Mrs.

Sackett were sisters. The Sacketts paid the arrearages, moved into the house, and continued to live there. Fifteen years later, Robert Briggs filed an action to void the oral contract as in violation of the Statute of Frauds and evict the Sacketts from the house. Who wins? Briggs v. Sackett, 275 Pa. Super. 13, 418 A. 2d 586, Web 1980 Pa. Super. Lexis 2034 (Superior Court of Pennsylvania). Facts The Briggs purchased a home at 167 Orchard Drive in Levittown, Pennsylvania. Six years later the Briggs were three months behind on the mortgage payments.

The Briggs entered into an oral contract to sell the house to the Sacketts if the Sacketts would pay their late mortgage and continue to pay their mortgage. The Sacketts paid the late mortgage, moved in and continued to pay the mortgage while living in the house. Fifteen years later Robert Briggs files to void the contract. Legal Issues The legal issue presented by Robert Briggs is an action to void an oral real estate contract because it violates the Statute of Frauds. While, the Statute of Frauds does indeed require real estate contracts to be in writing in order to be enforceable, the Statute of Frauds does not apply to Briggs v.

Sackett as the specifics of this case warrant an exception from the Statue of Frauds under the equitable doctrine of part performance. Applicable Laws The equitable doctrine of part performance allows the court to enforce an oral real estate contract if the agreement was partially performed. The buyer must make at least a partial payment towards the property and possess the property or make valuable improvements to the property. When considering if a case warrants exception to the Statute of Frauds under the equitable doctrine of part performance, the court also considers if a failure to enforce the agreement would cause injustice.

Judge Kline, P. J. clearly states in a similar case involving an oral real estate contract that: “The doctrine of part performance by the purchaser is a well-recognized exception to the Statue of Frauds as applied to contracts for the sale of real property. ” Sutton v. Warner, 12 Cal. App. 4th 415, 15 Cal. Rptr. 2d 632, Web 1993 Cal. App. Lexis 22 (Court of Appeal of California) The Sacketts meet the criteria for the exception to the Statute of Frauds under the equitable doctrine of part performance.

We can infer that since Briggs filed to void the oral contract he admits the oral contract exists. Let’s assume that the court accepts the terms of the oral agreement from the credible testimony of the Sacketts or their witnesses to the oral agreement. The Sacketts are fulfilling their part of the oral agreement as they paid the delinquent mortgage and they are continuing to pay the mortgage as agreed. In addition the Sacketts did take possession of the house after making the first payment. Voiding the contract now would cause considerable financial injury to the Sacketts.

Justice would not be served if the contract was voided because the Sacketts cannot easily be returned to status quo, as they have paid the mortgage of the home for 15 years under the assumption that they are the owners. Further, for 15 years the Sacketts have lived under the assumption that Briggs would fulfill the contract, as they had no reason to infer otherwise. Briggs’ silence could be interpreted as a conduct of acceptance of the terms of the oral contract. If Briggs did not agree with the terms of the oral contract he should have and could have come forward to the Sacketts or to the court in a reasonable time frame.

Conclusion The court will not allow Briggs to void the oral contract and evict the Sackett’s as his claim that the contract is in violation of the Statute of Frauds is not valid. The oral contract is enforceable under the equitable doctrine of part performance as the Sacketts made a payment towards the purchase price, took possession of the property, and voiding the contract would cause injustice to the Sacketts. The contract will be enforced by the court. 16. 10 Intentional Interference with Contractual Relations

Pacific Gas and Electric Company (PG ;amp; E) entered into a contract with Placer County Water Agency (Agency) to purchase hydroelectric power generated by Agency’s Middle Fork American River Project. The contract was not terminable until 2013. As energy prices rose during the 1970s, the contract became extremely valuable to PG ;amp; E. The price PG ;amp; E paid for energy under the contract was much lower than the cost of energy from other sources. Ten year later, Bear Stearns ;amp; Company (Bear Stearns), an investment bank and securities underwriting firm, learned of Agency’s power contract with PG ;amp; E.

Bear Stearns offered to assist Agency in an effort to terminate the power contract with PG ;amp; E in exchange for a share of Agency’s subsequent profits and the right to underwrite any new securities issued by Agency. Bear Stearns also agreed to pay the legal fees incurred by Agency in litigation concerning the attempt to get out of the PG ;amp; E contract. Who wins and why? Pacific Gas and Electric Company v. Bear Stearns ;amp; Company, 50 Cal. 3d 1118, 791 P. 2d 587, 270 Cal. Rptr. 1, Web 1990 Cal. Lexis 2119 (Supreme Court of California).

Pacific Gas and Electric Company (PGEC) v Bear Stearns ;amp; company deals with a long term agreement between PGEC and Placer County Water Agency. Where Placer County Water Agency sells electricity created by their hydropower plants to PGEC. This agreement was done in 1963 before the power increases of the late 70’s. The contract was not terminable until 2013. Years later Bear Stearns was able to convince Placer County Water Agency to try to get out of the contract with PGEC; Bear Stearns will take care of the legal fees from litigation in exchange of future profits and the rights to underwrite new securities issue by the agency.

PGEC sued Bear Stearns to stop them form interfering in the contract. PGEC applied for the rule of intentional interference with contractual relations that is when a third party induces a contracting party to breach the contract with another party. The rule applies when there is a valid enforceable contract between the contracting parties that were Placer County Water Agency and PGEC; third party knowledge of this contract that is Bear Stearns and finally, third party inducement to breach the contract in this case was Bear Stearns (Cheeseman, p. 257).

PGEC alternatively sought to state a cause of action for intentional interference with prospective economic advantage, alleging that regardless of the terms of the contract, it had an expectancy that the power sales would continue until 2013, and that Bear Stearns interfered with this valuable expectancy by inducing the Agency to seek to terminate the contract (http://scocal. stanford. edu). The court dismissed the case, because in reality there was no breach and there was just solicitation. 18. 2 Good or Service Mr. Gulash lived in Shelton, Connecticut.

He wanted an above-ground swimming pool installed in his backyard. Gulash contacted Stylarama, Inc. (Stylarama), a company specializing in the sale and construction of pools. The two parties entered into a contract that called for Stylarama to “furnish all labor and materials to construct a Wavecrest brand pool, and furnish and install a pool with vinyl liners. ” The total cost for materials and labor was $3,690. There was no breakdown in the contract of costs between labor and materials. After the pool was installed, its sides began bowing out, the 2” ? ” wooden supports for the pool rotted and misaligned, and the entire pool became tilted. Gulash brought suit, alleging that Stylarama had violated several provisions of Article 2 of the UCC. Is this transaction one involving goods, making it subject to Article 2? Gulash v. Stylarama, 33 Conn. Supp. 108, 364 A. 2d 1221, Web 1975 Conn. Super. Lexis 209 (Superior Court of Connecticut). Facts: The plaintiff, Mr Gulash, brought suit against Stylarama Inc(the defendant) for breach of an implied warranty of merchantability under the provision of Article 2 of UCC.

The question is whether the contract between Mr Gulash and Stylarama Inc is subject to the rules articulated in Article 2 of UCC. Analysis Article 2 of the Uniform Commercial Code applies to “transactions in goods”. The UCC defines “goods” as “all things, including specially manufactured goods, which are movable at the time of identification to the contract for sale …. ” If a contract is for the purposes of providing services rather than goods, the court will apply common law rather than the UCC. Mr. Gulash anted an above ground swimming pool. He contacted Stylarama Inc to construct the pool. Some time later the wood on the pool started to rot and the walls bubble. Mr. Gulash sued Stylarama for breach and implied warranty of merchantability under the provision of Article 2 of the UCC. In this case there are no transactions involving goods, making this case not subject to Article 2 that applies to transactions in goods. The UCC defines goods as tangible things that are movable at the time of their identification to a contract (Cheeseman, p. 282).

This case did not fall under the UCC as a good, because a pool is not a movable item. The contract for the construction of the pool was a provision of service that is not covered by article 2. 20. 3 Revocation of Acceptance Roy E. Farrar Produce Company (Farrar) was a packer and shipper of tomatoes in Rio Arribon County, New Mexico. Farrar contacted Wilson, an agent and salesman for International Paper Company (International), and ordered 21,500 tomato boxes for $0. 64 per box. The boxes were to each hold between 20 and 30 pounds of tomatoes for shipping.

When the boxes arrived at Farrar’s plant, 3,624 of them were immediately used to pack tomatoes. When the boxes were stacked, they began to collapse and crush the tomatoes contained within them. The produce company was forced to repackage the tomatoes and store the unused tomato boxes. Farrar contacted International and informed it that it no longer wanted the boxes because they could not perform as promised. International claimed that Farrar had accepted the packages and must pay for them. Who wins?

Farrar Produce Company a tomato packer contacted International Paper Company to purchase boxes to store the tomatoes. The salesman for International Paper had promised that each box could hold between 20 to 30 pounds of Tomatoes. Farrar ordered 21,500 boxes. When the first few thousands boxes were used they started to collapse. Farrar contacted International Paper and said that he did not want the boxes any longer. International Paper claims that Farrar was liable for the packages and must pay for them because he had accepted the shipment.

The applicable issue in this case was the revocation of acceptance; which stays that a buyer or lessee who has accepted goods may subsequently revoke his or her acceptance if the goods are nonconforming, the nonconformity substantially impairs the value of the goods to the buyer or lessee, and the goods were accepted before the nonconformity was discovered (Cheeseman, p. 314). The case is perfect example of this issue, when Mr. Farrar bought a product base on what the seller offer had and in reality the product was not up to par to what has been promised.

This not conforming product caused monetary damages to the company when tomatoes were crush and could not longer be sellable. The revocation of acceptance is valid because the buyer notified the seller about the nonconforming of the product and it was done within a reasonable time after the acceptance of the goods. Another issue that is applicable to this case is the implied warranty of fitness for a particular purpose under the UCC. That is when the sellers warrant that their materials are fit for ordinary purposes.

Sellers do not warrant that materials are fit for any particular purpose, however, unless the seller has reason to know the purpose for which the materials will be used and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods. Such a warranty is an implied warranty of fitness for a particular purpose (Fullertone). When the salesman for International Paper was told the purpose of the boxes and he recommended this specific product, he is telling the buyer that he understands and has the knowledge to select the right product.

So the boxes were not suitable for the shipping, packing and storage of the tomatoes. REFERENCES: Cheeseman, Henry R. (2010). Business Law: Legal Environment Online Commerce, Business Ethics and International Issues. (Seven Edition) New Jersey, NJ. Pearson Prentice Hall Pacific Gas ;amp; Electric Co. v Bear Stearns ;amp; Co. (retrieved November 4, 2011) http://scocal. stanford. edu Fullerton, James D. (nd) Uniform Commercial Code Sale of Goods. (Retrieved November 4, 2011) http://www. fullertonlaw. com