True Facts, Bad Deal

Here is an interesting, and true, fact pattern to discuss the issues of title under the UCC.

Under the UCC, one who has acquired possession based on a voluntary transfer of the goods by the title holder, acquires voidable title if the goods where obtained by fraud or deceit. While the goods are in the hands of the defrauder, the title holder may void the title and retrieve the goods. But under Article 2-403, a person with voidable title may transfer good title to a good faith purchaser for value. So if the defrauder has already sold the goods to a good faith purchaser for value, the title holder may not recover the goods from the buyer.

To be sure, the defrauder is liable to the title holder for the value of the goods. But thieves, even when apprehended, rarely have the means to pay damages.

According to the Daily Beast:

Two young men, identified as Kaleb Louis, 22, and Maurice Lewis, 20, flew from Houston, Texas, to Nashville on March 14. While still in the airport, the pair allegedly used a fake driver’s license and a stolen credit card to rent [a late model Chevy Suburban.]

After driving off the lot with the rented Suburban, Louis and Lewis allegedly set about making the car look like their own. They outfitted the rental with a license plate ripped from a Toyota Camry in a nearby apartment complex, and forged documents to indicate that they owned the car. Then they listed the Suburban on the Nashville Craigslist page.

A Lafayette, Tennessee, man thought he’d struck Craigslist gold. The Chevrolet Suburban, normally valued at around $60,000, was selling for half its normal price. All he had to do was bring $30,000 in cash to a McDonald’s parking lot in Nashville, and the new vehicle would be his.

But Kyle Whitlow, the would-be Suburban owner, grew suspicious of the deal when he forked over the $30,000. The 28-year-old handed the cash to two young men, who gave him the Suburban and sped off in their own car without even counting the money. Whitlow’s suspicions grew when he attempted to register the car later that day and found another name on the registry: EAN Holdings LLC, the parent company of Enterprise Rent-a-Car.

After selling the vehicle to Whitlow at McDonald’s, the pair boarded the next flight to Houston. According to police, they remain at large.

May Enterprise Rent-A-Car, the title holder obtain the car back from Whitlow or did Louis and Lewis pass good title to Whitlow in the parking lot sale?  Was Whitlow a good faith purchaser for value?  Why or why not?

Spoiler Alert from the Daily Beast:

An Enterprise representative declined to comment on the Suburban theft, or the frequency of other thefts from their lots. But with the exception of the license plate removed from the back of the Suburban, the company saw the car returned in one piece, police said.

SLAPPed With a Fine

Thank you to my UConn colleague, Robert Bird, for sending in this news item.

Well, it is not quite a SLAPP suit, but it employs the same principle.  You order a product online and get bad service. You write an online review expressing your opinion of the service.  Then the Seller informs you of a "fine" in the thousands of dollars because your "contract" contained a "non-disparagement" provision.  Don't pay the "fine" and the Seller reports the charge to credit agencies as if it were a debt. Watch the video for the whole story.



You can read the "non-disparagement" provision here: http://web.archive.org/web/20130817144417/http://www.kleargear.com/termsofuse.html
Thanks to Terence Lau at Univ. of Dayton, for providing the link

Here are only a few of the issues that come to mind for me:
1. You can't be fined for breaching a contract.  There can be a liquidated damages provision, but that is enforceable only if the provision is NOT a fine and IS a fair attempt at estimating damages.
2. If the Seller materially breaches the contract by not performing its obligations, then the Buyer's obligations under the contract are excused.
3. No court would enforce the contract provision as to do so would be government censorship of speech.
4. This is an attempt at SCOBUF (Strategic Censorship of Opinion by Unilateral Fine) (I just made that up.  Do you think it will stick?) It is along the same lines as SLAPP which is outlawed by legislation in many states.
5.  Perhaps the Buyers cannot get a lawyer to take their case, but where are the state regulatory agencies?  Is this not a classic "Unfair and Deceptive Acts and Practices" case?

The company seems to be attempting to name itself as both judge and jury in a defamation claim without bothering to actually file one.  See post on internet defamation.

A Case of Contractual Capacity

A Marine who served in Afghanistan and was discharged for PTSD and TBI has sued a Harley Davidson Dealership that refused to take back the motorcycle sold to him while he was suffering form the symptoms of his condition.  Did the dealership know or have reason to know that the Marine buyer could not act reasonably under the circumstances?  ABC News reports: :

Smith, who is unemployed, entered the Harley-Davidson dealership on a whim to buy a motorcycle, according to the lawsuit filed on Oct. 30. While there, he told the employees that he had PTSD, while pacing, sweating profusely and acting jittery.

"At one point, the salesperson even gave him water so that he could take his Xanax," said Gilleon. "He took three while he was there."

According to the Marine: "I know I was sweating fast. I was talking fast. I know I was jittery, and I kept misplacing personal items like my wallet all over the dealership," said Smith.

Failing to take back the motorcycle also resulted in a claim for unfair business practices.  Seems like the dealership manager should have taken a BLAW course.

Click on the image below to see a video news report:

When is Food Unfit For Its "Ordinary Purpose?"

The UCC says that every sale by a merchant includes the implied warranty of merchantability. "Merchantability," among other requirements, means that the goods are fit for the ordinary purpose for which such goods are intended. When the goods are food, that means that the warranty requires that the food be fit for human consumption. Typically, when the food contains foreign objects, like broken glass, or human fingers, the case is pretty clear that the warranty is breached.  However, what should be the test applied to determine if the warranty is breached when the food contains a natural, yet inedible object; i.e. beef bone in a hamburger, or a cherry pit in cherry nut ice cream. The emerging legal test seems to no longer turn on a foreign/natural object tests.  Instead the test is, "What is the reasonable expectation of the consumer?"

Needless to say, this consumer did not expect what she found in her green beans:

Can This be an Express Warranty?

In this post we pointed to the UCC Article 2 express warranty provisions.  In the video below, a bold statement is made by the retail sellers of coffee.  Is it a statement of fact or "puffing"?

Thank Goodness for Express Warranties

Under the UCC, an affirmation of fact that is part of the basis of the bargain constitutes an express warranty that the good will conform to the facts as affirmed. Prospective Dairy Queen customers were probably relieved to be able to rely on the express warranty springing from the affirmation of facts on the sign pictured below.  Perhaps a new slogan might be appropriate for DQ.  Here is my suggestion:

If you eat here and die,
It won't be from e-coli.



source of image: http://stevemandich.blogspot.com/2006/10/sign-o-times-1993.html

Rejecting Non-Conforming Goods

Clark Griswold (Chevy Chase) rejects non-conforming goods under UCC 2-601.

Click here or on image below to see video:

Law Lessong: The Bonnie Ships Peerless

The next installment in the “Law Lessong” series is The Bonnie Ships Peerless.  This simple video and song from a Power Point presentation helps explain the case of Raffles v. Wichelhaus in which the doctrine of mutual mistake was declared and explained.
Learn more about Law Lessongs from the post found here.  More videos may be found at my youtube channel. Please feel free to use them in the classroom or as assignments or in any way that they work for you as an educational resource.

This song was also recently featured in the ContractsProf Blog.

Be Empowered! - by UCC Article 2

Here is an introduction to article 2 that is likely to get student attention.

Singing the C.I.S.G.

University of Pittsburgh Law School Professor Harry Flechtner has composed and recorded a song extolling the virtues of the United Nations Convention on Contracts for the International Sale of Goods (C.I.S.G.). If this is your area, be prepared to be simultaneously entertained and educated.  I don't know a lot about the CISG, but I am a big believer in the use of music as a pedagogical device. Thank you, Professor Flechtner, for sharing this great educational resource by posting it on the web.  A tip of the hat to ALSB member George Siedel for bringing it to my attention.

Click on the link below to access the site with an audio file of the C.I.S.G. Song:
(image source: http://commissions.uianet.org/en/business-law-department/root-48/presentation/)

Law Lessong - Mixed Contract

The next installment in the “Law Lessong” series is Mixed Contract. This simple video and song from a Power Point presentation can help students learn and remember the need and means of distinguishing between a sale of goods contract under the UCC and a common law service or sales contract. When a mixed or hybrid contract is present, the predominant purpose of the contract must be determined.
Learn more about Law Lessongs from the post found here.  More videos may be found at my youtube channel. Please feel free to use them in the classroom or as assignments or in any way that they work for you as an educational resource.

Law Lessong - This Form is Your Form (Battle of the Forms)

The next installment in the “Law Lessong” series is This Form is Your Form (Battle of the Forms). This simple video and song from a Power Point presentation can help students learn and remember the UCC rules regarding additional rules in an acceptance. Learn more about Law Lessongs from the post found here.  More videos may be found at my youtube channel. Please feel free to use them in the classroom or as assignments or in any way that they work for you as an educational resource.

Man's Best Friend - Good Dog or Just Goods?

Goods are tangible, movable items.  The subject of this video is certainly tangible and quite movable! Credit goes to John W. Rowe, owner of the goods, for creating and sharing this video.