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FALL 2016

*INTRODUCTION TO UNITED STATES LAW--Discussion Problem No. 1
    --Last Modified: Monday, 18-Jul-2016 11:11:45 EDT

DISCUSSION PROBLEM—No. 1

PURPOSE AND GOAL OF THE PROBLEM

This problem gives the student an opportunity to do a close analysis of a statutory provision. This will give the foreign student exposure to the type of close analysis that often is expected in a US law school class room. And, it provides a vehicle to introduce students to how they might experience the Socratic method.

However, the problem is intended to do much more. It gives students an opportunity to: analyze and compare case law interpreting statutes; learn something about the structure of the Florida courts; gain a brief introduction to proper citation form for legal materials; apply what they have learned to evaluate the relative strength of different kinds of precedents; attempt some limited basic legal research; gain an understanding of the role of uniform law projects in the United States; and more.

FACTS:

You are an attorney licensed to practice law in Florida. You have agreed to represent a single mother of a child and a disabled veteran in two separate and distinct commercial disputes on a pro bono basis. [You should make time to read INTRO TEXT, Chapter 3, Legal Profession, Availability of Legal Services, at pp. 38-40, to understand how legal services are provided to low income and indigent clients—and the reference to “pro bono” though these pages can be read separate and apart from consideration of the problem. Also, you may read materials on the Florida Bar website at this link which describes pro bono and legal services.]

In the first case, Mother has told you that she contracted to purchase a pair of prescription eye glasses for her 8 year old son with Fancy Look, Inc (“Fancy”). She had ordered the pair of glasses for a total price of $440. Fancy required Mother to pay a deposit of $220 before it would process the order. Mother paid this deposit in cash.

Thereafter, Mother learned of a benefit program through which she might obtain eyeglasses for her son for free. Fancy called Mother to advise her that the order was ready for pick up. Mother told Fancy that she was going to cancel the order and obtain the eyeglasses elsewhere. She asked for the return of her deposit. Fancy told her that it would not refund any portion of the deposit.

Fancy was not able to re-use the lenses in the glasses, which had cost it $60 to have manufactured specially for insertion into the frames. Fancy was able to return the glasses frame into its inventory for potential sale to another customer. If it makes a difference to you, Fancy would have made a profit of $100 on the sale of the glasses frames, and a $10 profit on the sale of the lenses.

In the second case, Veteran ordered a wheelchair from Wheels, Inc for a purchase price of $4,000. Wheels required a deposit of $1,500, which Veteran paid in cash. Wheels made custom adjustments to the wheelchair which cost it $600 to make. Veteran cancelled his order when a local charity gave him a wheelchair for free. Veteran demanded a full refund. Wheels refused to return any portion of the deposit. As luck would have it, Wheels was able to promptly sell the wheelchair it had modified for Veteran to another customer for $3,400 (after it had spent $100 additional in labor to undo the special modifications).

All the parties are located in Miami-Dade County.

QUESTION FOR DISCUSSION

Is Mother entitled to the return of all or any portion of her deposit? If so, in what amount and why?

Is Veteran entitled to the return of all or any portion of his deposit? If so, in what amount and why?

APPLICABLE LAW

You know from your first year Contracts class in law school that the contract for the sale of glasses or a wheelchair is governed by the Uniform Commercial Code (“UCC”) because the they are moveable things which are classified as “goods” under the Uniform Commercial Code, and that Article 2 of the UCC governs the sale of goods. You have identified a section of Article 2 which appears to govern the deposit relationship between a buyer and a seller of goods—Fla. St. s. 672.718. You are going to start with a review of this section of the law BUT you are alert to the possibility that other sections of law may apply to this transaction.

[As foreign lawyers have not taken a first year course in U.S. contract law, the following background may be helpful. You should read INTRO TEXT, Chapter 11, Private Law, Contracts, at pp. 133-138, for a general overview of contract law. For a more in depth discussion of the common law of contracts, refer to CL TEXT, LECTURE VII. — CONTRACT.—I. HISTORY; LECTURE VIII. — CONTRACT. II. ELEMENTS. In the United States, contract law is primarily state law (rather than federal law). Moreover, the core of state contract law is the common law, rather than statute based law. There is, however, a big exception—the law of contracts for the sale of goods. All fifty states have adopted some form of the Uniform Commercial Code. Article 2 of the Uniform Commercial Code governs the sale of goods. It can be confusing to foreign lawyers because it would be natural to think of the Uniform Commercial Code as “uniform” throughout the United States. However, this is not always the case. A commission on uniform state laws has promulgated a model version of the Uniform Commercial Code. However, this model version is not the law in any jurisdiction. Rather, under the system of federalism in the United States, each state legislature must act to adopt the model law as the law for its state. In many cases, a state legislature will adopt most of the model law in the form recommended by the commission on uniform state laws. However, in the adoption process, the state legislature may elect to modify the recommended language or to omit certain provisions. What this means is that, for the most part, the Uniform Commercial Code is uniform throughout the land BUT it is not completely uniform—think of it in practice as the “mostly” Uniform Commercial Code. What this means is that, even when you are considering a sale of goods problem under the Uniform Commercial Code, you must determine which state law applies to the transaction and then look at that state's version of the Uniform Commercial Code. The link to the above Florida statute is to the applicable section of the Uniform Commercial Code as adopted by the Florida legislature. However, because the Uniform Commercial Code is mostly the same across the United States, cases decided under the laws of other states may serve as persuasive, though not binding, precedent to understand how particular provisions of the UCC should be interpreted and applied. The situation with the Uniform Commercial Code is not dissimilar from the state of the common law. It is possible that the common law has developed differently from state to state. This is why, for example, you sometimes must consider a majority version of a common law rule and contrast it with a minority position—points we covered in Lecture 2 and the related reading in INTRO TEXT. You may view the Uniform Law Commission website here.]

In addition, through a preliminary search for possible relevant case law governing deposits, you have found the following two cases, one in New York and one in Florida (though in an exercise below you will attempt to locate additional possible case law and other authority which might be relevant to your question—an exercise we will undertake only after initial consideration of the problem). Until you undertake your search for additional authority, conduct your analysis assuming the two below cases are the only ones of relevance.

FEINBERG v. J. BONGIOVI CONTRACTING

442 N.Y.S.2d 399 (N.Y. Dist. Ct. 1981)

DOUNIAS, J.:

Plaintiff instituted a small claims action to recover for return of down payment in the amount of $400. Plaintiff testified that he ordered wood, paid cash, received a receipt and three weeks later he canceled the order. He was advised that the cancellation would have to be forwarded to the woodcutter, who in turn would approve same, and his money would be returned to him.

In the instant case, the buyer notified the seller in writing prior to the delivery of wood that he was revoking the agreement. Further, he was provided by the seller with a written form confirming the rejection for the purpose of notifying the woodcutter who supplied the seller with wood of the rejection of the contract well before the delivery date.

Since it appears that the wood which was the subject of the action was never tendered to the plaintiff, there can be no question of acceptance or rejection (see U.C.C. 2–602 and 2–606). Rather, it would appear from the above facts that the buyer repudiated the contract (2–301, 2–610). Under these circumstances, U.C.C. 2–718(2) provides that even if the buyer repudiates, he may still recover a portion of his deposit. The amount recoverable is the amount deposited, less the lesser of $500 or 20% the value of the total performance. However, if the contract contains a liquidated damage provision, then the amount recoverable is the amount deposited less the liquidated damages. From this amount is deducted any damages to which the seller is entitled due to the buyer’s breach.

Since the contract does not contain a liquidated damage provision, the plaintiff is entitled to the following: $400 original deposit minus 20% of the contract price of $895, $179, making a subtotal of $221, minus $50 seller’s costs for notification to woodcutter, leaving a balance of $171.

Judgment for the plaintiff in the amount of $171, with costs and disbursements, plus interest from the date of repudiation, November 28, 1980.



HONSBERG v. LYSTRA

410 So. 2d 661 (Fla. Dist. Ct. App. 1982)

PER CURIAM:

In an action for declaratory and other relief Friedrich and Margarete Honsberg sought return of an earnest money deposit which they had paid to Richard Lystra toward the purchase of a mobile home. They appeal the final judgment which determined that they had breached the purchase and sale agreement and which permitted Lystra to retain a portion of the earnest money deposit on account of certain enumerated damages together with an additional amount resulting from the application of a theory of equitable distribution. We reverse that aspect of the final judgment which credited Lystra with $2,586.87 as an equitable distribution.

The parties entered into a contract for the purchase and sale of a mobile home on August 22, 1979. The agreement provided for a sales price of $28,000, of which $1,000 was to be paid to Lystra on execution, an additional $9,000 within six days thereafter, and the “remainder on closing when Honsberg house is sold.” It is undisputed that the Honsberg house was placed on the market and that it had not been sold at the time this action was commenced. The parties’ interpretation of the contract as it relates to these facts is divergent, but there is nothing in the agreement or on the record that would justify reversal of the trial court’s conclusion that the house could have been sold by November 25, 1979, thus establishing the date on which damages began to accrue. The implied holding that sale of the house was not a necessary condition precedent to closing on the sale of the mobile home is sustainable under several alternative theories, and therefore will not be disturbed on appeal.

We come, then, to the issue of damages. The final judgment first concluded that the earnest money deposit constituted liquidated damages, noted that a provision for liquidated damages is “subject to the rule of conscionability” and proceeded to calculate the parties’ respective rights in the $10,000 deposit, applying those principles.

The agreement of the parties provided with respect to damages and the earnest money deposit:

5. Upon failure or the refusal of the purchaser to complete said purchase within 30 days of contract date, or an agreed extension therefor for any reason (other than cancellation on account of increase in price) the cash deposit may have such portion of it retained as will reimburse the dealer for expenses and other losses including attorney fees occasioned by purchaser’s failure to complete said purchase. In the event a used car, trailer or mobilehome has been taken in trade, the purchaser hereby authorizes the dealer to sell said property, at public or private sale, and to deduct from the proceeds thereof a sum equal to the expenses and losses incurred, or suffered, by the dealer by reason of purchaser’s failure to complete the transaction. Dealer shall have all the rights of a seller, upon breach of contract, under the Uniform Commercial Code 2–708, 2–710, 2–718, of the Uniform Sales Act (as applicable).

This is not a provision for liquidated damages. It is, in fact, exactly the opposite. Simply put, paragraph 5 says that the deposit shall constitute a fund securing to the seller the actual amount of damages he sustains by reason of buyers’ failure or refusal to complete the purchase. The trial court correctly determined that the amount of actual damages proven by the seller was $4,826.26, leaving a deposit balance of $5,173.74. Applying a theory of equitable distribution this amount was to be divided between the parties. The net result is that Lystra retains $7,413.13 and $2,586.87 is returned to the Honsbergs. Neither the parties’ agreement nor any statute to which our attention has been directed permits this result.

Appellants breached the purchase and sale agreement entitling appellee to retain from the earnest money deposit his actual damages in the amount of $4,826.26. The balance, $5,173.74, is to be refunded to appellants. The trial court is instructed to modify the final judgment to give effect to the foregoing determination. As so modified, the final judgment is affirmed.

AFFIRMED in part; REVERSED in part; and REMANDED with instructions.



EXERCISES AND QUESTIONS FOR DISCUSSION

1. Carefully reconstruct how the court computed damages in each of Feinberg and Honsberg. Was the method of computation the same or different? How does each method used in the cases compare to the method of computation set forth in the literal language of the UCC?

2. What version of the UCC should you consult to evaluate the law applied in Feinberg? HINT: It is not the Florida version of the UCC. See the New York law here.

3. If you apply the method of computation used in each of Feinberg and Honsberg to the facts of Mother and Veteran, do you get different results?

4. As between Feinberg and Honsberg, which case provides a stronger precedent and why? Is either precedent binding?

[Notes for Question 4:

In law school, particularly in writing classes, you will likely hear reference made to “The Bluebook.” The Bluebook is a style manual for legal writing which sets forth the proper form to use to cite different kinds of legal materials in legal writing. It is widely used to prepare legal academic publications. For briefs, legal memoranda and court opinions, the situation is more complex. A student's first instinct would be to use the Bluebook citation form for those types of writings as well. However, local rules in many states either suggest or, more likely, mandate use of another citation form. As part of a lecture, the Professor will briefly introduce students to a bit of the arcana of legal citation. However, the below discussion should give the student an idea of what may be at issue with legal citation. The issue of citation is decidedly a bit of a detour from the problem itself except to the extent it illustrates how citation is used to facilitate identification of binding precedent as opposed to merely persuasive precedent.

The citation to Honsberg v. Lystra before the case begins [ 410 So. 2d 661 (Fla. Dist. Ct. App. 1982) ] appears to be in proper “Blue Book” form. It tells us that the case was decided by a Florida District Court of Appeals. In the hierarchy of Florida courts, this court sits directly below the Florida Supreme Court. However, the citation does not tell us which Florida District Court of Appeal decided the case. On investigation, we learn that there are, in fact, five district courts of appeal located in Florida. On further investigation, we can discover that Honsberg v. Lystra was a case decided in the Fourth District in Florida. In the legal shorthand used by Florida lawyers, Honsberg would be considered a “Fourth DCA” case. Now, consider Lecture Topic 2: Common Law (in particular the portion discussing the difference between binding precedent and persuasive precedent—including the cross-referenced reading in INTRO TEXT).

It should occur to you that the failure of the Blue Book citation form to convey the information about the identity of the Florida District Court which decided the case could be very important. Why? Because it will help us identify in a case in Florida whether Honsberg might be considered binding precedent or merely persuasive precedent. For another case heard in the Fourth DCA, Honsberg (if it has not been overruled, modified, supplemented, etc.) might serve as binding precedent. However, in a case heard in another district—the Third DCA, for example—Honsberg could not serve as binding precedent but would merely be persuasive precedent.

Now, you might ask yourself how it can be that the apparently official Blue Book citation form omits this potentially crucial information. The answer lies in the fact that not all courts accept the general Blue Book citation form. In fact, courts often publish their own rules of citation which they expect litigants to follow. In a brief filed in the Fourth DCA, for example, we learn that the correct citation form for Honsberg is: Honsberg v. Lystra, 410 So. 2d 661 (Fla. 4th DCA 1982). This form of citation tells us what we need to know for purposes of evaluating its strength as a precedent in a Florida court. The citation rule to use is contained in Rule 9.800. Uniform Citation System, contained in the Florida Rules of Appellate Procedure, at page 135. The website for the Fourth DCA contains a link to the applicable rules of appellate procedure (find it in the left hand column). The rules are found on the website maintained by the Florida Bar in a section devoted to the publication of various rules (note that the current version of the Florida Rules of Appellate Procedure was published on July 1, 2016—a reminder that laws and rules are subject to change and, accordingly a lawyer must be vigilant always to use the most current version).

You should know that an updated online version of the Blue Book now contains a specific instruction to include the “4th DCA” information for a citation used in-state, i.e. in the State of Florida, which may be found here. You may note that for citations used outside the State of Florida, the citation as used at the start of the case in your materials is correct.]

5. What is the version of the UCC which appears at this link? Read the following link about Uniform Laws in the United States.

6. [NB: This portion of the problem will be addressed ONLY AFTER a full class discussion of the basic problem.] As an exercise, try to find other authority which may be relevant to answering our two deposit questions. [Hint: there are other cases interpreting the UCC provisions on deposits and there is at least one case which appears directly on point. When you find other materials, you will need to evaluate the strength of those materials as precedent.] Explain whether any of the additional materials which you locate change your analysis of the facts as presented.

Policy Implications for Discussion

Though links in the problem, as well as cross-referenced material to INTRO TEXT, give the student some indication of how legal services in the United States are provided to poor or indigent persons, it is a fact that poor and indigent persons within the United States are under served by the legal community. There are many reasons for this. In our problem, for example, the dollar amounts involved in the dispute are so low that no private law firm would undertake representation of the matter for profit. Legal services simply are too expensive to address many consumer problems, for example, even if a party has the financial ability to pursue a claim. Here, the problem specified that the matters were handled pro bono to provide a realistic scenario in which the matter might be addressed.

[You should know that there is a procedure which we will briefly consider later in the course called a “class action” in which multiple similar cases are considered in a single proceeding to make pursuit of remedies cost effective. Also, you will briefly be introduced to small claims courts in which cases are heard involving small dollar amounts with streamlined procedures designed to reduce costs of litigation.]

Legal services to poor and indigent persons are often thinly staffed with poor resources. This places a premium on a detailed knowledge of the rules and an ability to analyze problems quickly.

As we will see later in the course, in criminal matters the state often pays for counsel to represent the poor or indigent defendant because such representation is mandated by the U.S. Constitution. However, even in criminal matters, coverage by counsel often is not complete. For example, in death penalty cases, in some states a convicted person sentenced to death is not entitled to appellate counsel as a matter of right (even though counsel was provided at the trial level). In these states, the defendant must handle his or her appeal pro se—i.e. on their own.

Students are invited to consider how problems of under representation of poor and indigent persons should be handled in a just society.






Last Modified: Monday, 18-Jul-2016 11:11:45 EDT