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200756 Study Guide - Final Guide: Fiduciary, Rescission, Damages

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School
UWS
Department
University of Western Sydney
Course
200756
Professor
John Juriansz

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Document Summary

Facts: musgrove, an employee of securicor, started a fire at photo production"s factory to warm himself while at work and accidentally burnt it down, costing. Issue: for present purposes, the main issue was the effect of exclusion clauses in limiting or absolving (cid:494)secondary rights(cid:495) flowing from a breach of contract. In theory, a plaintiff cannot be allowed a specific remedy, no matter how advantageous it may be, so long as there exists a compensatory remedy which meets the technical tests of adequacy. Restitution: the wrongdoer will not be let off upon payment of the amount he has benefited if the innocent person has been harmed to a greater degree. 3: restitution is available as a remedy for (cid:494)not-wrongs(cid:495) as well as wrongs such as in the case of mistake or unjust enrichment, there is a difference between disgorgement and restitution and this should be differentiated later.

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Related Questions

Learning Activity 1

This assignment focuses on UCC contracts.

Scenario: Landmark Company is a US-based business that sells iron tables to retailers in the US. The tables are purchased from individual metalsmiths, from US wholesale suppliers, and suppliers in Mexico.

Landmark ordered by telephone 300 iron tables to be shipped by April 1 from Metal Elements, Inc., another US company. No other sales terms were discussed. Landmark followed up the telephone call with an email to Metal Elements confirming the number of tables in the order and the delivery date, but did not discuss price. Metal Elements did not respond but shipped the tables as ordered to Landmark by April 1 at a price of $700 each, totaling $210,000.

Landmark’s new Director of Purchasing, Payton Mann, is concerned about whether Landmark is bound to accept the tables from Metal Elements since Landmark had no formal acceptance or written correspondence Metal Elements. Payton is also concerned about the price of the tables which is higher than she had expected to pay. She emails you, one of the Landmark owners, to explain the situation with Metal Elements and to seek your advice about the sales.

Respond to Payton via email including:

A. An analysis and explanation of whether this is a valid contract between Landmark and Metal Elements, and why or why not; suggest to Payton how this situation should be handled;

B. For Payton’s future information, include in the email a hypothetical situation in which the same facts apply as in the Landmark – Metal Elements order except that, upon inspection, fifty of the tables delivered from Metal Elements were damaged; provide an analysis of Landmark’s options and suggestions for resolving this situation with Metal Elements.

Sources: Saylor: Advanced Business Law and the Legal Environment

Chapter 8: Formation of Sales and Lease Contracts, Uniform Commercial Code, Contracts for Sale of International Goods (CISG)

Chapter 9: Title, Risk and Insurable Interest

Chapter 10: Performance, Breach of Sales Contracts and Remedies

Chapter 11: Sections 11.1-11.7 (Warranties and Product Liability)

Week 5 Overview

SALES AND LEASE CONTRACTS

Formation of Sales and Lease Contracts, Uniform Commercial Code, Contracts for Sale of International Goods (CISG)

Introduction: Contracts for the sale and lease of goods are based primarily on the Uniform Commercial Code (UCC), rather than common law contract principles. UCC Article 2 and Article 2A govern contract formation for the sale and lease of goods. The goal of the UCC is to provide a relatively simple, straightforward guide to commercial transactions without the formality and inflexibility required to validly form other types of contracts. The UCC has been adopted in all states; Louisiana has not adopted Articles 2 and 2A. Because globalization has increased the scope and number of international sales transactions, the United Nations Convention on Contracts for the International Sale of Goods (CISG) is a model uniform law that applies for those nations that have adopted it.

Title, Risk, and Insurable Interest

Introduction: The UCC addresses and clarifies the concepts of identification of specific goods to a contract, when risk of loss for goods passes from a seller to a buyer, and which party to a sales contract holds an insurable interest in goods. Under the UCC, typically title and risk of loss for the goods in a specific transaction pass from a seller or lessor to a buyer or lessee according to specific terms in the contract between the parties. Parties to sales and lease agreements often have insurance to protect against damage, loss, or destruction of goods.

Performance, Breach of Sales Contracts, Remedies

Introduction: Under a sales or lease contract subject to the UCC, the seller or lessor has the basic duty to transfer and deliver the goods according to the contract terms, and the buyer or lessee has the basic duty to accept and pay for the goods. Parties may also be bound to implied terms based on customs within an industry, or based on prior contracts and dealings between the parties. When a contract is breached, the non-breaching party has available remedies under the law, such as retaining the goods or requiring the breaching party to perform under the contract. As with common law contract principles, remedies are designed to put the non-breaching party in essentially the same position as if the contract had not been breached.

Warranties and Product Liability

Introduction: A warranty is a promise, or guarantee, by a seller or lessor that certain facts are true of the goods being sold or leased. Types of warranties include (1) warranties of title guaranteeing that the goods have clear and valid title, (2) express warranties promising specific facts about the goods, and (3) implied warranties of merchantability, or fitness for a particular purpose. A warranty creates a legal duty for the seller or lessor; a non-breaching party can recover damages for breach of warranty(ies). Because warranties are associated with the sale or lease of products, breach of warranty claims are a part of product liability claims and manufacturers and sellers of goods can be held liable for breach of warranty for defective products. Warranties are subject to regulation under the UCC, product liability tort law, contract law, and the Magnuson-Moss Warranty Act.

Comparison of Common Law vs. UCC Contracts

Introduction: Common law contract principles are stringent, specific, relatively rigid and rules-laden, and require clarity in the formation and performance of agreements. Common law contract rules focus on protecting the rights and interests of parties to an agreement. UCC contract principles are more flexible, looser, permit implied terms in agreements, focus on “keeping the deal together”, and expediting business transactions. The UCC rules rely on prior dealings between the parties, customs within an industry, and reasonableness to complete contracts that may have omitted or implied terms. Both common law and UCC principles are based on fairness for the parties, and provide remedies, such as compensatory damages or specific performance, for contract breach. The goal of remedies for breach under both common law and the UCC contracts is to restore the non-breaching party to essentially the same position as if there had been no breach.

Forensic Accounting by Rufus, Miller and Hanh:

Page: 68: Problem 3-92:

Below I have the article: “Expert Witness Malpractice Actions:Emerging trend or Aberration?” published in The Practical Litigatorin March 2004. Prepare a summary of the article that addresses thefollowing questions:

What is the thesis of the article?

What is meant by a friendly expert?

How do cases summarized in the article illustrate expertnegligence?

Does the Mattco case support the author’s thesis?

What is the conclusion of this article?

How might the pre-engagement considerations discussed here, helpprevent a friendly expert negligence action?

ARTICLE:

Expert Witness Malpractice Actions: Emerging Trend orAberration?

FROM “AMUSEMENT PARKS” TO “ZOOLOGY,” the Technical AdvisoryService for Attorneys (TASA) Web site lists more than 9,500categories of experts. Large accounting firms and other forensicfirms perform litigation support services. And theMartindale-Hubbell directory contains more than 4,000 experts,ser
vices, suppliers, and consultants. In just a few decades, expertwitnesses in litigation have gone from a rarity to the commonplace,for both trial preparation and for actual trial testimony. Often,the expert testimony, especially on damages, is the main event ofthe case. As one court has noted, “[o]ften they play as great arole in
27
Laurie Strauch Weiss is a partner in the law firm of Orrick,Herrington & Sutcliffe LLP in New York, New York. The authorwould like to thank Yishai Boyarin, Orrick Summer Associate 2003,for his assistance with this article.
Laurie Strauch Weiss Expert witnesses have historically enjoyedbroad-ranging immunities. But the picture is changing.
Expert Witness Malpractice Actions: Emerging Trend orAberration?
the organization and shaping and evaluation of their client’s case,as do the lawyers.” Murphy v. A.A. Mathews, 841 S.W.2d 671, 682(Mo. 1992). The amount of time and money expended in this area issubstantial; and as every litigator knows, an expert can make orbreak a case. But what do you do if that expert performs his or herlitigation services work negligently and it results in a pooroutcome for your client? What liability does the expert face? What,if any, liability does the attorney who selected and retained theexpert face? Yes, it is true that an expert can make or break thecase. This article addresses the “break” side of theequation.
THE EROSION OF THE COMMON LAW DOCTRINE OF WITNESS IMMUNITY •Testimonial experts have traditionally been protected from lawsuitsarising out of their work by the doctrine of witness immunity.However, a theory of expert witness liability is emerging andseveral states have ruled that a retained expert witness, theso-called friendly expert witness who testifies voluntarily and whois compensated for his or her services, is no longer shielded fromnegligence in providing pretrial litigation services or trialtestimony. Compare Murphy v. A.A. Mathews, supra, at 680, n.7(limiting holding to pretrial litigation support services ratherthan trial testimony) with Marrogi v. Howard, 805 So.2d 1118, 1131(La. 2002) (holding that there was no immunity for either pretrialwork or trial testimony). These cases do not contemplate an actionin which a party sues an adverse expert witness hired by anopposing party.
The Traditional Rule Experts who participated in judicialproceedings traditionally were rewarded with the broad protectionof an absolute immunity privilege from subsequent liability forcommunications related to the action. Alongstanding doctrine, itaimed at allowing witnesses to be forth
right and candid in their opinions in judicial proceedings withoutthreat of a future defamation suit by an aggrieved party. Theprivilege applied to any communication “(1) made in judicial orquasi-judicial proceedings; (2) by litigants or other participantsauthorized by law; (3) to achieve the objects of the litigation;and (4) that had some connection or logical relation to theaction.” Mattco Forge, Inc. v. Arthur Young & Co., 6 Cal. Rptr.2d 781, 787 (Cal. Ct. App. 1992) (“Mattco I”). See also Restatement(Second) of Torts §588 cmt. a (1977) (“[t]he function of witnessesis of fundamental importance in the administration of justice. Thefinal judgment of the tribunal must be based upon the facts asshown by their testimony, and it is necessary therefore that a fulldisclosure not be hampered by fear of private suits fordefamation”). The policy of absolute witness immunity is groundedin concerns that without such protection, witnesses might befearful of testifying and conform the content of their testimony toprotect themselves from future suit. Although the doctrineoriginally arose in the context of protecting an expert witnessfrom subsequent defamation claims arising out of the expert’stestimony, some states, either by statute or common law,articulated broad pronouncements of the privilege. The situation ofa negligent “friendly” expert was not addressed. Thus, actions bythe parties who had retained the expert rarely were pursued. Now,however, that rule is beginning to meet resistance from severalcourts, a pattern that will be discussed below. See Eric G. Jensen,When “Hired Guns” Backfire: The Witness Immunity Doctrine and theNegligent Expert Witness, 62 UMKC L. Rev. 185, 194-95 (1993), for ahelpful discussion of the evolution of witness immunity.
Professional Liability Standards Adiscussion of expert witnessmalpractice requires reference to the general negligence
28 The Practical Litigator March 2004
Expert Malpractice 29
standard to which professionals are held. In California, forexample, “[t]he elements of a cause of action in tort forprofessional negligence are: (1) the duty of the professional touse such skill, prudence, and diligence as other members of hisprofession commonly possess and exercise; (2) a breach of thatduty; (3) a proximate causal connection between the negligentconduct and the resulting injury; and (4) actual loss or damageresulting from the professional’s negligence.” Mattco Forge, Inc.v. Arthur Young & Co., 60 Cal. Rptr. 2d 780, 788 (Cal. Ct. App.1997) (“Mattco III”) (citations omitted); see also Murphy v. A.A.Mathews, supra; LLMD of Michigan, Inc. v. Jackson-Cross Co., 740A.2d 186, 191 (Pa. 1999) (“[t]he judicial process will be enhancedonly by requiring that an expert witness render services to thedegree of care, skill and proficiency commonly exercised by theordinarily skillful, careful and prudent members of theirprofession”).
Legal and Policy Rationales The reasons for not extendingtraditional witness immunity to expert witnesses are generallysuccinct: experts should not be given special protection; if theymake a mistake that causes damage they should be held responsibleas are other professionals. (For a discussion of arguments for andagainst see Randall K. Hanson, Witness Immunity Under Attack:Disarming “Hired Guns,” 31 Wake Forest L. Rev. 497, 508-509(1996)). In addition, it has been argued that permittingmalpractice suits against expert witnesses will enhance theintegrity of their testimony and of the judicial system as a whole.See Carol Henderson Garcia, Expert Witness Malpractice: A Solutionto the Problem of the Negligent Expert Witness, 12 Miss. C. L. Rev.39, 71-72 (1991). Conversely there are numerous oft-cited policyreasons for not allowing such suits to proceed:
• Experts should be protected by the general rule of witnessimmunity because the threat of litigation would lead to skilledexperts being unwilling to testify; • The concern that the“one-time” university professor would be reluctant to testify as heor she would be unlikely to carry errors and omissions coverage; •The idea that the threat of liability would cause experts to changetheir testimony for fear of subsequent litigation; • The argumentthat the adversarial system, specifically the tool ofcross-examination (as well as Dauberthearings) addresses, to someextent, these concerns. Compare Jensen, supra, with Adam J. Myers,III, Misapplication of the Attorney Malpractice Paradigm toLitigation Services: “Suit within a Suit” Shortcomings CompelWitness Immunity for Experts, 25 Pepp. L. Rev. 1 (1997).
CASE LAW REVIEW • Currently, eight state courts have decided casesinvolving lawsuits against “friendly” expert witnesses. Theoverwhelming majority of courts, albeit a handful overall, thathave addressed the issue of negligent experts and witness immunityhave found professional witness malpractice an actionable claim.These cases all involve “friendly” experts (with the exception ofNew Jersey which allowed a suit against a court appointed expert),rather than adverse party experts. (For a recent case addressingthe adverse party issue in the context of a criminal defendant whosued the prosecutor’s expert witnesses for negligently performingtests, preparing for testimony and testifying, seeDavis v. Wallace,565 S.E.2d 386 (W. Va. 2002).)
Washington State: Witness Immunity Still Controls In Washington,the immunity doctrine still
protects friendly experts from subsequent liability for negligentacts. The case of Bruce v. ByrneStevens & Assocs. EngineersInc., 776 P.2d 666 (Wash. 1989) (en banc) is the most expansivestatement yet of expert witness immunity. In the underlying actionin Bruce, two parties sued an adjacent landowner to recover thecost of stabilizing their land due to a condition the landowner hadallegedly caused. Plaintiffs hired an engineering expert to providean opinion on damages and to testify at trial. Subsequent to thatsuit, the parties discovered that it would cost twice what theengineer had estimated and thereafter brought an action against theexpert witness alleging that he negligently tendered an opinion ondamages in prior litigation. The court below had held that as theengineer was a professional, with a financial motive fortestifying, the traditional doctrine should not provide immunity toa party’s own expert who was negligent in preparing and providingtestimony. The Washington Supreme Court disagreed and reversedholding that the engineer hired as an expert witness was entitledto immunity in a subsequent suit based on his testimony. The courtextended absolute witness immunity to the expert’s courtroomtestimony, as well as to acts and communications connected with thepreparation of his testimony. The court rejected the plaintiffs’argument that the witness immunity doctrine is narrow and shouldonly apply to defamation cases brought against an expert. The courtalso held that the fact that an expert is compensated for histestimony did not deprive him of witness immunity. Id. at 668.Finally, the court held that witness immunity extended to actionsforming the basis of the expert’s testimony reasoning “[a]nexpert’s courtroom testimony is the last act in a long, complexprocess of evaluation and consultation with the litigant.” Id. at672. The court distinguished the case where the expert’s work wasprepared separate from and prior to the initiation of litigationin
contrast to the case before it where the expert engineer was hiredspecifically for litigation purposes and the work performed formedthe basis of the testimony. The court went on to hold that “theimmunity of expert witnesses extends not only to their testimony,but also to acts and communications which occur in connection withthe preparation of that testimony.” Id. at 673. The Bruce court didnot find the fact that an expert witness was compensated for histestimony to affect the rationale for witness immunity. The courtset forth two reasons underlying its holding: • First, the courtnoted a concern about a loss of objectivity if the threat ofsubsequent liability existed; • Second, the court considered thepractical problem that the threat of liability would discourage“the 1-time expert—the university professor” from testifying whileencouraging the professional witness who could carry insurance toprotect against liability. Id. at 670. One justice vigorouslydissented arguing that there was no legal authority for theextension of immunity to shield otherwise actionable professionalmalpractice. The dissent argued that “[i]n reality, a distinctionmust be drawn between defamation and acts of professionalmalpractice subsequently published in the courtroom. Despite theprofessed reliance upon the policies underlying immunity, in theend the majority holds that immunity stems merely from taking ‘partin judicial proceedings.’ A simple analogy demonstrates theinvalidity of this holding: There is no question that an attorney’sdefamatory statement during a judicial proceeding is shielded fromsubsequent attack under the doctrine of immunity. However, the sameattorney remains liable to his or her own client for any acts ofmalpractice that occur in that very forum. Accordingly, from thisday forward under the majority’s new rule, professionals,particularly attorneys, are provided with a