Using IRAC method analyze two business law cases

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USING THE I-R-A-C STRUCTURE IN WRITING EXAM ANSWERS The IRAC method is a framework for organizing your answer to a business law essay question. The basic structure is: Issue, Rule, Analysis, and Conclusion. Using this simple framework for structuring your answer will ensure that you have written a complete answer. Issue Begin your answer by stating the issue presented by the essay question. Sometimes the question will provide the issue for you. If not, then ask: What is the legal question that, when answered, determines the result of the case? The issue should be stated in the form of a question in a specific, rather than general form: “Is there an agency relationship if there was no compensation paid?” would be an acceptable issue. “Will the plaintiff win?” would not be acceptable. Note that the issue may be case specific, mentioning the parties’ names and specific facts of the case. Example: “Did Jones have an agency relationship with XYZ Corp. due to his acting on behalf of XYZ and following its instructions?” The issue can encompass all cases which present a similar question. Example: “Is an agency created whenever there is an employment relationship?” Most cases present one issue. If there is more than one issue to address, then you must write a separate IRAC analysis for each issue. Rule The rule describes which law or test applies to the issue. The rule should be stated as a general principal, and not a conclusion to the particular case being briefed. Example: “An agency relationship is created when there is an agreement that the agent will act for the benefit of the principal at the principal’s direction or control regardless of whether compensation is paid” would be an acceptable rule. “The plaintiff was the defendant’s agent” would not be an acceptable rule. Do not use parties’ names or specific facts from the case. Hint: Frequently, the rule will be the definition of the principle of law applicable in the case. Example: An agent may not use or disclose confidential information acquired through the agency absent an agreement to the contrary. Analysis The analysis is the most important, and the longest, part of your answer. It involves applying the Rule to the facts of the problem or question. You should use the facts to explain how the rule leads to the conclusion. Discuss both sides of the case when possible. Important: Do not merely state a conclusion without also stating reasons for it. A conclusion without reasons or explanation means that you have not used the rule and the facts to analyze the issue. Hint: The rule can be used as a guide in your discussion. Example: Suppose the issue is whether A is an independent contractor. Using the facts of the case, explain whether or not they fit into the definition of what is an independent contractor: “In this case, A was told by the foreman what to wear, how to operate the machine, and when to report to work each day, giving her little control over the job.” If the rule is a test with multiple factors, then you must analyze each factor by pointing out how the facts do (or do not) fulfill each factor. Conclusion The conclusion is your answer to the Issue. State the result of your analysis. Examples: “Smith is liable for negligence” or “Therefore, no valid contract was formed between X and Y.” If there are multiple issues, there must be multiple conclusions as well. SAMPLE IRAC ANALYSIS Caroline was employed as a receptionist for ABC Corporation. Her desk was located at the entrance of the corporate office and her duties were to greet customers, answer telephone calls, sort mail, and respond to general requests for information about ABC. One day, while all of the managers of ABC were out of the office, a representative of XYZ Insurance Co. stopped by to solicit ABC as a new client. He told Caroline that he wanted to find out whether ABC might be interested in canceling its present employee health insurance plan and adopting a plan provided by XYZ. Although Caroline explained that none of the ABC managers were in the office, the XYZ representative nevertheless described his company’s health insurance plan in detail. When Caroline reacted by stating that XYZ’s plan sounded better than the current ABC plan, the XYZ representative immediately produced a contract for Caroline to sign. Reluctantly, Caroline signed the contract accepting the offer to adopt XYZ’s insurance plan. If XYZ seeks to enforce the contract against ABC, is ABC bound to the contract? ANSWER EXPLANATION Whether the insurance contract is binding on ABC Corp. depends on whether A had actual or apparent authority to enter into it. Actual authority is the agent’s power or responsibility expressly or impliedly communicated by the principal to the agent. Express actual authority includes the instructions and directions from the principal, while implied actual authority is the agent’s ability to do whatever is reasonable to assume that the principal wanted the agent to do to carry out his or her express actual authority. Here, Caroline’s express authority was to answer phones, direct messages, collect and sort the daily mail, greet visitors, and schedule appointments for the company managers. Her implied authority was to do anything reasonably related to performing those duties. She was not given any express authority to sign contracts, and signing contracts was not related to or implied in her duties as a receptionist. Therefore, Caroline had no actual authority to bind ABC to the contract. First, the main issues to be addressed are stated. Apparent authority arises when the principal’s conduct, past dealings, or communications cause a third party to reasonably believe that the agent is authorized to act or do something. In this case, ABC did not communicate to XYZ that Caroline had authority to enter into an insurance contract, and no facts suggest that ABC and XYZ had done business in the past. The nature and typical responsibilities of Caroline’s position as a receptionist does not make it reasonable for the XYZ representative to conclude that she was empowered to select and approve health insurance plans for ABC’s employees. Thus, Caroline had no apparent authority to authorize the contract. Because Caroline did not have either actual or apparent authority to sign the contract, it is not binding on ABC Corp. The general rule of law to be applied in analyzing the next issue is stated. Next, the applicable rules of law or legal tests to be used in analyzing the issue are explained. The rule of law or legal test is applied to the facts. Note that the facts are not merely repeated; rather, they are linked to elements of the rule or test as evidence to explain and justify the ultimate conclusion that there is no actual authority. Conclusion as to the first issue. The rule is applied to the facts. Note that the facts mentioned are those that relate to the definition of apparent authority. Conclusion for the second issue. An overall conclusion is reached as to the issue of liability. CASE 15.1 TRUE STATIC OTVESS L&H Construction Co. v. Circle Redmont, Inc. District Court of Appeal of Florida, Fifth District, 55 So.3d 630 (2011). GOD WE 1 RUST BACKGROUND AND FACTS L&H Construction Company was a general contractor involved in the renovation of the Thomas Edison historic site in West Orange, New Jersey, for the National Park Service. L&H contracted with Circle Redmont, Inc., which is based in Melbourne, Florida, to make a cast-iron stair- case and a glass flooring system. Redmont's original proposal was to "engineer, fabricate, and install"the staircase and flooring system. During negotiations, however, installation and its costs were cut from the deal. In the final agreement, payment was due on "Supervision of Installation instead of "Completion of Installation."Nevertheless, the final agreement stated that Redmont would engineer, fabricate, and install"Later, Redmont claimed that this was a mistake. L&H insisted that installation was included. L&H filed a suit in a Florida state court against Redmont. The court found that the word install in the phrase "engineer, fabricate, and install" was the result of a mutual mistake. L&H appealed. CASE 15.1 CONTINUES Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or Chapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall leaming experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 292 UNIT THREE Contracts and E-Contracts CASE 15.1 CONTINUED IN THE LANGUAGE OF THE COURT PER CURIAM. [By the Whole Court) A mistake is mutual when the parties agree to one thing and then, due to either a scrivener's error [an error made by the person copying the document) or inadvertence (carelessness), express something different in the written instrument. [Emphasis added.] Clearly, the final contract between L&H and Redmont was ambiguous. While the final *** proposal stated that Redmont was to "engineer, fabricate and install" the staircase and flooring system. (the agreement alsol states that the final $40.000 progress navment was "Due CASE 15.1 CONTINUED IN THE LANGUAGE OF THE COURT PER CURIAM. [By the Whole Court) **** A mistake is mutual when the parties agree to one thing and then, due to either a scrivener's error [an error made by the person copying the document] or inadvertence (carelessness), express something different in the written instrument. [Emphasis added.] Clearly, the final contract between L&H and Redmont was ambiguous. While the final *** proposal stated that Redmont was to "engineer, fabricate and install" the staircase and flooring system, [the agreement also] states that the final $40,000 progress payment was "Due upon Supervision of Installation." The trial court allowed the parties to present some parol evidence to establish the parties' true intent and subsequently found the contract contained a mutual mistake as to whether Redmont was to install, or merely supervise, the installation of the product. This was an issue that could have been decided for or against either party and we cannot say the trial court's findings of fact were unsupported by competent, substantial evidence. Although the face of the contract clearly reflected a duty to install, Redmont's wit- nesses' testimony supported the trial court's finding that it was the express understanding between Redmont and L&H that Redmont would only supervise, and not provide complete installation of the staircase and flooring system. Redmont's witnesses testified that L&H knew that installation was being deleted as a means of saving money for L&H. Redmont's installation supervisor testified that the final *** proposal was specifically worked up to schedule the progress payments toward the end of the job pursuant to L&H's president's request, and that L&H had decided that it wanted only installation supervision, and the contract price reflected installation supervision, not complete installation. Redmont's chief financial officer] further testified that L&H was aware that Redmont was not going to install the product "because L&H's president had asked us to take the installation out to save money." Moreover, Redmont's president testified that he spoke directly with L&H's president regarding Redmont's supervision of installation and it was decided that Redmont would only provide installation supervision. *** Redmont's president also reiterated [repeated] that he had direct conversations with L&H's president where he said, "Fred, how can we save me some money here and what can we do." The weight to be given to the testimony turned on the witnesses' credibility, a matter exclusively within the trial court's province. DECISION AND REMEDY A state intermediate appellate court upheld the lower court's finding that the use of the word install in the parties' agreement was a mutual mistake. The appellate court reversed the lower court's final judgment in Redmont's favor on other grounds, however. WHAT IF THE FACTS WERE DIFFERENT? Suppose that Redmont had intentionally misled L&H to believe that installation was included in the price. Would the court's decision on the mutual mistake issue have been different? Discuss. THE ECONOMIC DIMENSION The parties performed as agreed, with Redmont working on sched- ule and L&H making timely payments, until the issue of installation arose. Assuming that no further disputes CASE 15.2 Fazio v. Cypress/GR Houston I, LP Court of Appeals of Texas, First Division, __S.W.3d__(2012). CATE ON BACKGROUND AND FACTS Peter Fazio began talks with Cypress/GR Houston I, LP, to buy retail property whose maintenant was a Garden Ridge store. In performing a background investigation, Fazio and his agents became concerned about Garden Ridge's financial health. Nevertheless, after being assured that Garden Ridge had a positive financial outlook, Fazio sent Cypress a letter of intent to buy the property for $7.67 million based on the currently reported absolute net income of $805,040." Cypress then agreed to provide all information in its possession, but it failed to disclose that: 1. A consultant for Garden Ridge had recently requested a $240,000 reduction in the annual rent as part of a restructuring of the company's real estate leases. 2. Cypress's bank was so concerned about Garden Ridge's financial health that it had required a per- sonal guaranty of the property's loan. The parties entered into a purchase agreement, but Garden Ridge went into bankruptcy shortly after the deal closed. Fazio sued Cypress for fraud after he was forced to sell the property for only $3.75 million. A jury found in Fazio's favor, but the trial court awarded judgment n.o.v. ("notwithstanding the verdict", see Chapter 3) to Cypress. Fazio appealed. IN THE LANGUAGE OF THE COURT Evelyn V. KEYES, Justice. We * * * hold that Fazio's claims clearly fall within the category of claims for which an action for fraudulent inducement lies. [Emphasis added.] Cypress knew from the express representation in the LOI [letter of intent] that Fazio was willing to pay the requested purchase price of $7,667,000 for the Property "based on the cur- rently reported absolute net income of $805,040." It further knew that this income was gener- ated by rental income received from Garden Ridge. Fazio agreed in the LOI to conduct due Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or Chapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall leaming experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. CHAPTER 15 Mistakes, Fraud, and Voluntary Consent 295 CASE 15.2 CONTINUED diligence [background investigation], and, in accepting the LOI, Cypress agreed to "provide Buyer with all information in [its) possession ***." Fazio, an experienced real estate inves- tor, and his experienced agents conducted reasonable due diligence before Fazio signed the Purchase Agreement, including requesting and reviewing all economic information about the Property in Cypress's possession. When Fazio discovered disturbing information about Garden Ridge in the financial statements provided to him, he conducted further investigations with both Garden Ridge and Cypress. He was repeatedly assured that all was well and that Garden Ridge anticipated strong sales ***. A reasonable person in Fazio's position would clearly have attached importance to the facts that approximately eight months before he purchased the Property in September 2003, Garden Ridge had retained [a consultant] to assist it in restructuring and renegotiating Garden Ridge's real estate leases; [the consultant] had prepared a letter for Garden Ridge to send to landlords; a copy of that letter, stating that Garden Ridge was restructuring and that as part of its restructuring it needed to reduce its occupancy costs at certain stores, including the Garden Ridge store on the Property, was sent to Cypress's President, Maguire, on March 5, 2003; and [the consultant] had contacted Cypress's Director of Finance and others at Cypress on at least three other occasions to discuss the proposed rent relief, seeking an annual rent reduction of 30% for the Property, or $241,512. A reasonable real estate investor who had signed an LOI to purchase the Property for $7,667,000 on September 2, 2003 would also attach importance to and be induced to act on the information that, on August 14, 2003, Cypress's lender, Guaranty Bank, had requested that Cypress's President execute a personal guaranty of the balance of $4,500,000 on the $5,704,000 loan secured by the Property because the bank was concerned about Garden Ridge's financial condition. *** We*** hold that Cypress's active concealment of this material information, which it was under a duty to disclose as financial information material to the real estate transaction in its possession, was fraudulent as a matter of law. DECISION AND REMEDY The Texas appellate court reversed the trial court and held that Cypress was liable to Fazio for fraud. THE ETHICAL DIMENSION Was Cypress's conduct unethical? Why or why not? THE SOCIAL DIMENSION What does the decision in this case suggest to sellers of commercial real estate and others who engage in business negotiations?
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Business Law IRAC Analysis
L&H Construction Co. vs. Circle Redmont, Inc.
Issue
Was there a mutual mistake between L&H and Circle Redmont?
Rule
The word install in “engineer, fabricate, and install” was due to a mutual mistake.
Analysis
In contract law, a mutual mistake occurs as a mistaken assumption that is made by both
parties regarding the conditions surrounding a contract. This means that when parties enter into a
contract and have a similar mistaken assumption regarding a fact concerning a contract, the
contract becomes voidable by the party that the mistake harms, provided the party does not bear
the risk of the assumption being wrong. L&H ...


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Excellent resource! Really helped me get the gist of things.

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