Contracts Vivian the Landlord & Rawlings the Tenant: Undue Influence? Vivian Mei

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Contracts

Vivian the Landlord & Rawlings the Tenant: Undue Influence?

Vivian Meissner was 93 years old. She is a widow without children or close relatives. She lived in her own home in Marshalltown. There is a small apartment on the second floor which she has occasionally rented. In the fall of 1985,she rented to the apartment to Rawlings and his two-year-old son just before Thanksgiving.

Rawlings began helping Meissner by performing a variety of household chores and other odd jobs. He also helped with her finances. He spent a lot of time with Meissner, and sometimes monitored her phone calls. On April 12, 1987, Meissner sold her homestead by contract to Rawlings, retaining a life estate for herself. In addition, she sold her 1985 Cadillac and 1970 Oldsmobile to Dale Rawlings, as well as certain time certificates, savings accounts, jewelry and other items of personal property. Each of these transfers required $1.00 in consideration. The documents drawn up which transferred Meissner's property were prepared by Rawlings.

Mesissner was often confused and forgetful. She would often have to contact bank personnel several times in one day because she was unable to recall completing transactions or receiving answers to her questions.

Nancy a long-lost niece of Meissner shows up, and convinces her aunt to bring an action to rescind the contracts wherein Meissner transferred her property to Rawlings. The Complaint asserts that Meissner was unduly influenced, and she therefore did not voluntarily agree or consent.

QUESTION: How do you rule? Was there undue influence? What is the test? What are your reasons?

Motorhome Nightmare: Fraudulent Misrepresentation?

Mr. and Mrs. Hylers wanted to buy a motorhome. After seeing a television advertisement for Autorama, the Hylers visited with a salesman there and looked at several display models. The Hylers explained to the salesman they wanted a motor home that Jim could drive and maintain within the limitations imposed by his disability. They were particularly concerned about having an adequate warranty so Jim would not be burdened with maintenance. Following several conversations with the salesman, the Hylers decided in July 1992, to purchase a 1992 Lexington Mallard recreational vehicle. They paid $62,115 for the motor home. The motor home purchased by the Hylers came with three warranties.

Over the next year, the Hylers experienced numerous problems with the motor home. The problems occurring between late July 1992, and early July 1993, included many loose components such as the shifting console, television stand, air conditioner, batten strips, and defroster vent.

Many problems recurred during the year: the side walls separated from the floor in several places, air leaked across the dash, and the windshield seal loosened to the point the windshield began to fall out. The dash separation was so severe that the road was visible and the Hylers could not drive the motor home at night because too many bugs came through the opening. Despite numerous attempts to repair these problems, they continued to exist.

The written warranty from the manufacturer stated that if the buyer did not receive satisfactory warranty service from the dealer, the buyer was invited to contact the manufacturer. After the Hylers noticed the side walls separating from the floor, they attempted to call the manufacturer. They discovered that the manufacturer had ceased operations and filed a petition for bankruptcy in May 1992, two months prior to the date the Hylers purchased their vehicle. Autorama knew that the manufacturer had filed for bankruptcy at the time it sold the motor home to the Hylers.

The Hylers' attorney wrote to Garner in June 1993, rescinding the purchase contract and tendering the motor home. Autorama's denied the request for rescission and refused the tender of the motor home.

Hylers' claim of misrepresentation is based on Autorama's alleged failure to disclose (1) the manufacturer's troubled financial condition and its bankruptcy, and (2) the negligible value of the manufacturer's warranty.

The elements of an equitable claim for rescission based on misrepresentation are (1) a representation, (2) falsity, (3) materiality, (4) an intent to induce the other to act or refrain from acting, and (5) justifiable reliance.

QUESTIONS: How do you rule? Do you rescind the contract based on fraudulent misrepresentation? Why or why not?

I Want My Farm Back!

Mrs.Citylife, 70 years old, is sick of living on her farm outside of Indianola. She wants to move to West Des Moines and start living! She orally agrees to sell her farmhouse and 40 acres to her neighbor, Mr. Farmland for $100,000. They shake hands. Mrs. Citylife’s children hear of the oral contract, and convince their mom that she could get a better price, and she should wait a year or two to sell. Mrs. Citylife tells Mr. Farmland to forget it – she will no longer sell. Mr. Farmland has not paid her any money, but he is mad. They had a deal, and they shook on it!

Mr. Farmland sues Mrs. Citylife based on the oral contract. How should Mrs. Citylife respond? Does she have a defense?

WAIT – what if the facts are different? Same facts, except when they shook hands, Mr. Farmland gave Mrs. Citylife a check for $10,000. Plus, the next week, he moved into the farmhouse. Two weeks later, Mrs. Citylife showed up at the farmhouse, and told him she changed her mind – she did not want to sell. Mr. Farmland sues to enforce the oral contract.

Same result? Why or why not?

Please read this case provide the answers to the following questions.

1. I am the owner of a bank in town. The bank has just been robbed by Jesse Jones. I post a sign: “Wanted dead or alive – Jesse Jones. $5000 reward.” The next day, you see the reward poster, find and shoot Jesse, and bring his body to my office. Is there a contract? Why or why not?

2. Suppose the sheriff has a reward sign that says: “Wanted: Jesse Jones. Bring him for a $5000 reward.” You do not see my sign, but you bring Jesse Jones (alive) to the sheriff’s office because you know he has committed other crimes. On the way OUT of my office, you see the sign for the first time. You return to the sheriff’s office and ask for the $5000. Was there a contract? Why or why not?

3. You say, “I want to sell my car.” I say, “I want to buy it.” Do we have a contract? Why or why not?

4. You say, “I am thinking of selling my car for around $10,000.” I say, “I will buy it. Here is a check for $10,000.” Is there a contract? Why or why not?

5. I send you a letter offering to sell you my car for $5,000. Before the letter arrives, you send me a letter offering to buy my car for $5,000. My letter reaches you and your letter reaches me on the same day. Do we have a contract?

6. I send you an unsolicited email offering to sell my car for $5000 and stating that if I do not hear from you by Sunday, I am assuming that you have accepted my offer. You read the email and delete it. I don’t hear from you by Sunday. Do we have a contract?

7. I send you a letter on Tuesday offering to sell you my car for $5,000, giving you until Saturday to accept or reject my offer. The letter reaches you on Wednesday. On Friday, I am killed in a car accident. On Saturday, not knowing that I have died, you send a letter accepting my offer. Do we have a contract?

8. I say to you, “If you paint my home on Saturday, I will pay you $1000.” You don’t respond, but on Saturday, you come and paint my home. Do we have a contract?

9. I own an office equipment company and have had a VERY bad day. I say to you, my top salesperson, “I offer you this business for $100.” You say, “I accept your offer.” Do we have a contract?

10. Joe Smith says to his daughter Jill, “In consideration of the fact that you received an A on your business law exam last week, I promise to pay you $1000 next week.” Is there a contract?

11. A fire breaks out in the UIU-Des Moines building. The dean immediately calls the fire department and says that the UIU-DSM building is on fire, and if the WDM fire department comes and put it out, UIU will donate a brand new fire truck to the fire department. The fire department gets there in two minutes and puts out the fire with little damage. Is there a contract?

Explanation / Answer

I would nullify the contract that Meissner had signed with Rawlings.

There was undue influence. It is clear that Meissner is very old and is not of competent mind in order to judge situations like this. Rawlings took advantage of this situation and acquired the will and the estate.

The tests that would be performed are

Was the contract confidential? Yes

Was it for the benefit of the gaining party only? Yes

Did the beneficiary have the opportunity to influence the grantor decision? Yes

Considering the test I will nullify the contract as the grantor was not competent or of sound mind.

I would rule in favor of the Hylers and rescind the contract on basis of fraudulent misrepresentation. The reason is that if we consider the five elements of misrepresentation then we find that the point 4 and point 5 were satisfied.

Autorama, being a dealer in motorhomes obviously knew about the bankruptcy and did not inform Hylers about it. They also assured a warranty of 3 years when that is not possible. Hylers on the other hand did not have expertise in motorhomes and relied on the words and statements of the salesperson from Autorama. Hence there has been a clear misrepresentation with the intention of selling the vehicle and making profit.

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