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Agricultural Law

by: Norbert Terry

Agricultural Law ARE 306

Norbert Terry
GPA 3.85


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This 73 page Class Notes was uploaded by Norbert Terry on Thursday October 15, 2015. The Class Notes belongs to ARE 306 at North Carolina State University taught by Staff in Fall. Since its upload, it has received 10 views. For similar materials see /class/223766/are-306-north-carolina-state-university in Agricultural & Resource Econ at North Carolina State University.

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Date Created: 10/15/15
Unit 3 Dispute Resolution ARE 306 I Litigation in an Adversary System In an adversarial system two parties present con icting positions to a judge and often a jury The plaintiff called the petitioner in a court of equity is the party who initiates the lawsuit The defendant or respondent in a suit for equity is the party who is sued An intervenor is a third party not originally a party to the suit who comes into the suit with the court s permission in order to protect his rights or le a claim Amicus curae means friend of the court and refers to a person not the plaintiff or defendant with strong views on the subject matter of the case who requests permission to file a brief on behalf of one of the parties An amicus curae does not become a party to the suit Our common law adversarial system is to be contrasted with civil law inquisitorial systems of justice prevalent in most of the world except those once under British in uence Under our system each party has the primary responsibility to bring information before the judge or jury The judge and jury are generally prohibited from making any inquiries or investigations on their own Indeed if it is found that either the judge or jury considered evidence not presented by a party a mistrial may be declared and a new trial ordered Parties generally have no duty to volunteer evidence unless requested to do so as the result of a proper discovery request from an adverse party Exceptions to this general rule are found mostly under rules governing prosecutorial conduct in criminal trials Under an inquisitorial system a court of cial or judge may have the r quot quot quot of J quot an 39 J J investigation Under such a system the parties are generally required to reveal all relevant information in their possession to the court r There are generally three types of courts First administrative courts handle individual adjudication by administrative agencies Second trial courts have the power to decide questions of fact and law Third appellate courts have the authority to review decisions of trial courts or lower appellate courts However in this review they are con ned to the trial court record and limited to questions of law not fact The role of a jury is to determine questions of fact A grand jury is convened to hear accusations in criminal cases and to decide whether there is reason to have a trial This jury does not determine whether the defendant is guilty It is called a grand jury because it has more jurors than a trial jury 1223 jurors The ordinary jury for a trial is called a petit jury and it consists of 612 members Jurisdiction is the power of a court to hear and issue a decision in a certain type of case There are different types of jurisdictions For example jurisdiction concerning the parties can involve jurisdiction over the person or over property Personal jurisdiction is the power that a court has over the defendant s person and it is required in order for the court to issue a judgment that affects the interests of a particular person On the other hand jurisdiction over property is either in rem which is the court s power to determine the rights of all parties to certain property or quasi in rem which is the power of the court to determine only the defendant s interest in certain property within the geographical limits of the court Another type of jurisdiction is that which is inherent in the court itself A court has general jurisdiction for any cases that are the type that the court is authorized to hear However jurisdiction in that court can then be limited by dollar amount subject matter or geography The venue of a lawsuit is the location of the court proceedings This is based on convenience if more than one court has jurisdiction A judgment of a court with improper venue is nonetheless valid and enforceable whereas the judgment of a court that lacks jurisdiction is void and unenforceable Certain preliminary matters must be addressed before a trial begins For example a person must have standing in order to initiate a lawsuit which means that his own interests have been directly affected by the matter in controversy to the extent that he is the proper one to bring suit A case is considered moot when there is no actual controversy to be settled and courts will not hear such a case Also a matter must be ripe for review by an appellate court which means that an actual injury or loss must have occurred in order to avoid speculation by a court Once these matters are determined each party can compel a disclosure of material facts by the other party in a process called discovery This process assists each side in preparing its case and may narrow the issues Also before trial each party can make pretrial motions For example a defendant can file a motion to dismiss where he claims that even if the facts are true the plaintiff does not have a recognized cause of action Another example is a motion for summary judgment which can be made by either party at any time prior to the verdict Here the moving party claims that there is no genuine issue as to any material fact and that he is entitled to prevail as a matter of law The function of a trial is to settle a dispute in a peaceful manner Each side to the controversy has an opportunity to present its evidence and reasons for prevailing The role ofthejudge is to keep order and rule on issues of law The role ofthe jury is to decide what are the true facts After the jury is selected each side gets an opportunity to present its case The attorney for each side makes an opening statement In a civil case the plaintiff has the initial burden to prove that there is sufficient evidence to support his position If he does so then the defendant has the burden of producing evidence to contradict the evidence submitted by the plaintiff The jury or the judge if there is no jury must consider only the evidence admitted during the trial when deciding on what are the true facts Evidence can be the testimony of witnesses or physical evidence After all evidence is presented the attorneys make closing arguments and the jury considers the evidence and reaches a verdict After the verdict is rendered the losing party can make a motion for a judgment notwithstanding the verdict J NOV Qudgment as a matter of law in the federal courts which seeks a judgment under the law in spite of a contrary verdict by the jury In order for a judge to grant this motion there must be no substantial evidence to support the jury s verdict Another posttrial motion is a motion for a new trial This can be made by either party and argues that the judge made a serious legal error during the trial A judgment is the nal decision of a court regarding the rights and claims of the parties to a suit and resolves the dispute The judge may also issue orders which are directions of the court not included in the judgment After a judgment is rendered by the court either party has a right to appeal that decision to a higher court The appeal may be as of right which is a predetermined route to a particular higher court e g from the trial court to an intermediate appellate court or the appellate court may have the discretion as to whether to take the appealed case Historically there have been separate systems of jurisprudence for law and equity though now in federal courts and most state courts the same court has jurisdiction over both legal and equitable matters In an action under law the relief granted to the plaintiff is usually confined to monetary damages However in an action for equitable relief the remedy is usually injunctive prohibitive such as l a temporary restraining order TRO which is granted in emergency conditions for a short period of time without advance notice ex parte to the adverse party 2 a preliminary injunction granted after a hearing for the purpose of preserving the relative positions of the parties until the rights of the parties can be determined and 3 a permanent injunction which may remain in force for years after the conclusion of the suit The Seventh Amendment right to a jury trial is available only in civil actions at law and in serious criminal matters When there are so many potential parties in an action that it would be impossible to bring them all before the court one or more can bring the suit on behalf of the entire class This is called a class action The representative of the class must fairly represent the entire class and the class must be ascertainable and all members must have a definable interest in the controversy Class action law suits may make it economically feasible to seek a remedy where each person s individual damages were not large enough to make an individual suit feasible Alternative dispute resolution ADR is a way to resolve a civil dispute without filing a lawsuit The parties agree to have the controversy heard by an impartial third party One form of ADR is mediation This is usually voluntary although courts and legislatures are increasingly making it mandatory Mediation may as with nuisance actions against farmers be a statutory precondition for filing a lawsuit mediation may also be ordered by a judge after a suit is filed The suggestions made by the mediator are not binding so that even if mediation is mandatory there is no requirement that an agreement be reached Another form is arbitration This usually results from a contractual agreement or is required by a statute A hearing is held before an arbitrator and then he makes his decision which is binding on the parties if the arbitration is binding If the arbitration is nonbinding the parties may accept or reject the decision 11 The Federal Court System Jurisdiction is the authority of a court to hear and make a binding decision in a particular case The federal courts have jurisdiction over cases where the subject matter involves a federal question ie a claim based on the US Constitution a federal statute or a federal treaty Federal courts have exclusive jurisdiction in the areas of patents copyrights trademarks admiralty bankruptcy antitrust as well as those cases involving federal crimes and suits in which the US is a party In contrast federal courts have concurrent shared jurisdiction with state courts in the areas of federal questions e g most environmental statutes Also in cases involving diversity of citizenship the parties are from different states when the amount in controversy exceeds 75000 federal and state courts have concurrent jurisdiction For the federal court to have diversity jurisdiction diversity must be complete no defendant or plaintiff from the same state In diversity cases the federal court will apply state law The determination of which state s law to apply is governed by complex choice of law rules Where federal jurisdiction is based upon a federal question related state claims may be heard by the federal court under pendant jurisdiction If the federal claim is dismissed the pendant claims must also be dismissed This past year 2005 Congress created a new type of federal jurisdiction over certain large dollar class actions The US Supreme Court is the highest court in the country Article III of the US Constitution established this court The Supreme Court has one Chief Justice and eight Associate Justices appointed by the President with the consent of the Senate The Constitution gives original jurisdiction a case is rst heard in this court in all cases that involve Ambassadors or other public Ministers and Consuls or in disputes between states In all other cases involving federal questions the US Supreme Court has appellate jurisdiction review of a case heard first in another court In some cases an appeal is mandatory but usually the Court decides whether it will hear a case on appeal and does so by granting a writ of certiorari The other federal courts created by Article III are the appellate courts called Circuit Courts of Appeal and the trial courts called District Courts The intermediate appellate courts are called Circuit Courts because the judges used to travel out to the courts within their areas circuits North Carolina is in the Fourth Circuit which also includes Maryland South Carolina Virginia and West Virginia In total there are 13 federal circuits of which 11 are geographic groupings of states one is for the District of Columbia DC and the last is the Federal Circuit a nongeographic circuit whose reviews are limited to specific subject matter In addition to its geographical jurisdiction the DC Circuit Court is assigned the role of reviewing certain environmental and other regulations In addition to the above federal courts the US Constitution in Article I established certain specialty courts for specific types of disputes Unlike the judges of Article III courts who have life terms the judges of Article I courts are appointed for fixed terms The standard of review for specialty courts is usually more stringent than for other courts Examples of Article I courts are the US Bankruptcy Court the US Court of Federal Claims the US Tax Court and the US Court of International Trade 111 North Carolina Courts North Carolina has two appellate courts The Supreme Court is the highest court and it usually chooses which cases it will hear Its decisions are binding on all lower courts both appellate and trial courts This court is composed of one Chief Justice and siX Associate Justices and they are elected for eightyear terms The NC Court of Appeals reviews cases from the trial courts and the right to this review is usually automatic upon a proper request rather than at the discretion of the Court There are twelve judges but only three judges hear each case The decisions of this court are binding on all trial courts There are several types of trial courts in the North Carolina system including the Superior Court Division and the District Court Division The Superior Court is a court of general jurisdiction which means that it can hear all cases except those speci cally assigned to certain specialty courts such as probate court A Superior Court judge presides over civil actions involving more than 10000 all criminal felonies and other criminal cases appealed from the District Court In the District Court Division a District Court judge hears most civil actions where the amount in controversy is less than 10000 juvenile matters domestic relations matters such as divorce child support child custody and division of marital property as well as cases concerning involuntary commitment of mentally ill persons and most criminal misdemeanors If a civil action involves 4000 or less it is heard by a Magistrate These cases have a right of appeal de novo to the District Court which means that the case will be started over as if it had never been heard by the Magistrate Unit 5 Torts ARE 306 1 De nition A tort is a private or personal wrong that has been imposed upon one person by another as a result of an invasion of a legal right or a breach of a legal duty and for which a court will grant monetary damages A tort does not include the breach of a contractual duty The wrong can be intentional unintentional or in some cases without any fault at all by the wrongdoer II Intentional Torts An intentional tort is a voluntary act where the wrongdoer intended to bring about a speci c consequence or where he knows or should know that the consequences will occur When the court nds that a tort was committed intentionally it will grant not only monetary damages to make right the injury suffered by the plaintiff but may also award punitive exemplary damages compensation in excess of actual damages to the plaintiff in order to punish the wrongdoer Some examples of intentional torts are trespass wrongful interference with the person property or rights of another battery unwanted touching of another false imprisonment illegal con nement intentional in iction of emotional distress acts or words intended to shock defamation libel or slander and invasion of privacy placing a person in a false light using a person s name or publicizing a private life Some torts are also crimes and the wrongdoer will be subject to criminal prosecution which is not for the purpose of compensating the injured party but rather for punishing the wrongdoer A tort would be a crime if the wrong was such unacceptable conduct that it interfered with the interest of the public not just the interest of a private party III Negligence The tort of negligence is based on four elements 1 the defendant owed a duty of reasonable care to the plaintiff 2 the defendant breached this duty by failing to do what a reasonable and careful person would do under similar circumstances 3 the breach of duty was the proximate cause of plaintiff s injury proximate cause is that which directly caused the speci c injury and without which the injury would not have happened and 4 there was damage to the person or the property of the plaintiff Negligence can be de ned as a failure to do something that a reasonable person would do under similar circumstances It can also be the doing of some act that a reasonable person would not have done under the same circumstances This law is based on society s expectation that everyone will exercise due care in his conduct toward others if it can be foreseen that the conduct might result in an injury Negligence results from carelessness thoughtlessness or inadvertence rather than from willfulness If a plaintiff can prove the four necessary elements to establish a claim of negligence under common law the defendant may be able to offer a defense that will prevent a recovery of damages by the plaintiff One such defense is called contributory negligence Society also expects a person to exercise due care for the safety of his own self or property Therefore if a plaintiff is negligent in caring for himself in preventing the injury then he cannot recover any damages from the defendant even though the defendant was also negligent A second defense to negligence under the common law is called assumption of the risk This can be raised when the plaintiff voluntarily assumes a known risk Instead of a reasonable person standard the judge or jury considers the specific facts and circumstances before denying a recovery of damages to the plaintiff A modification of the contributory negligence defense is called the doctrine of last clear chance Ifthe defendant had the last chance to avoid the injury but failed to do so then the contributory negligence of the plaintiff will not prevent the plaintiff s recovery for damages This result happens because the plaintiff s negligence was not the proximate cause ofthe injury a necessary element for this tort Because of the harshness of a complete bar to recovery by the plaintiff under the defense of contributory negligence many states now have statutes that allow some recovery under the theory of comparative negligence or comparative fault The judge or jury compares the negligence of the plaintiff with that of the defendant and divides the damage award between the two parties proportionately As in most civil actions the plaintiff must prove by a preponderance of the evidence that all four elements are present for a negligence claim This is called the burden of proof A preponderance of the evidence means that the jury believes that it is more probable than not that the evidence is true One way to establish this burden of proof is the use of circumstantial evidence to prove the defendant s negligence when there is no actual proof available This theory is called res ipsa loquitur the thing speaks for itself In order to use this method of proof the plaintiff must show that l the injury would not ordinarily occur without negligence by someone 2 the defendant had complete control over the thing that caused the injury and is the only one that knows the facts as they happened and 3 the plaintiff was not at fault in any way Under this rule the court presumes the defendant s negligence and the burden of proof is shifted to the defendant to show otherwise IV Strict Liability As discussed above there usually must be a finding of fault to establish an intentional tort or negligence An exception to this is the concept of strict liability Under this exception a person who engages in an ultrahazardous activity or an abnormally dangerous activity is liable for all injuries proximately caused by his activity even if he took the most care possible to prevent such injuries no proximate cause requirement Therefore this is liability without fault An activity is considered to be ultrahazardous or abnormally dangerous if it involves a high degree of serious harm the risk cannot be eliminated even with reasonable precautions and the activity is inappropriate to the place where it is conducted V Insurance In addition to reducing the risk of tort liability by exercising reasonable care in his activities a person can also protect himself and his assets from the nancial burdens of tort liability with insurance A liability policy can cover a wide range of potential hazards If a farmer gets a comprehensive liability policy he will be covered for payments for personal and property injuries to third parties to whom the farmer is liable and also for medical payments to injured persons regardless of the farmer s tort liability Even though the comprehensive liability policy may cover an extensive array of injuries it will not cover all circumstances A general exception to coverage is for injuries that result from intentional torts or from crimes committed by the insured farmer There are however exceptions newspapers can obtain coverage for defamation claims Also the insurance company will only pay damages that are the legal obligation of the insured e g one resulting from a court judgment but will not pay those obligations that are only moral ones one which the plaintiff wants to compensated for but is not a legal obligation of the defendant An important aspect of insurance is the obligation of the insurance company to defend the insured This aspect of most policies requires the insurance company to provide an attorney at no cost to the insured and pay other associated costs of litigation This is an often overlooked reason for obtaining insurance coverage Insurance policies should be reviewed carefully before they are purchased to insure sufficient coverage for the farmer s individual situation After purchase they should also be reviewed periodically to make sure that the amounts and types of coverage continue to be appropriate Oral statements of an insurance agent do not generally bind the insurance company the written policy controls VI Liability in Pesticide Application Injuries from pesticide sprays may result to persons or property outside of the targeted spray area In these circumstances the farmer who sprays or hires someone else to spray for him may be held liable for damages under several different theories If spraying is considered an ultrahazardous activity the sprayer andor the one who hires the sprayer may be held strictly liable for resulting damages If the pesticide application is done by an 39 J r J the 39 A will generally have no liability unless a court finds that the spraying was an extraordinarily dangerous activity If spraying is not considered inherently dangerous the grounds for liability may be negligence Alternatively another grounds for liability could be trespass or nuisance Additionally most states impose some form of regulatory liability VII Duty to Protect Those Entering Agricultural Land In order for a farmer to be held liable for an injury to another who is on his land there must be some proof of negligence on the part of the farmer The status of the injured person is a factor in defining the duty owed by the farmer to that person There are three categories of persons entering agricultural and other land trespasser licensee and invitee If the party coming onto the land is a trespasser one who enters and remains without permission the duty of reasonable care owed by the landowner is slight However the landowner may not maliciously injure a trespasser he may not use more force than necessary to evict the trespasser from the premises after he has been asked to leave and he may not use deadly force under any circumstances A landowner must also allow the use of his land by one whose use is necessary to prevent bodily injury or death Such a person is not a trespasser but may be required to pay for any actual damages to the property A landowner who refuses one who needs to use the land out of necessity may be found both criminally and civilly liable There is a higher duty owed to a licensee one who enters the land with permission for his own purpose or business rather than for the landowner s or tenant s bene t An example of a licensee is a social guest Here the landowner has the additional duty to warn the licensee of dangerous conditions or dangerous animals on the premises Ifthe licensee is a hunter the landowner may also have a duty to warn him of other hunters already on the property In its 1998 decision in Nelson v Freeland the NO Supreme Court eliminated the category of licensee and held that all licensees would be treated as invitees It left the trespasser category unaltered The highest level of duty is owed to an invitee one who is on the land with permission for the benefit of the landowner or tenant Examples of invitees are a repairman or a hunter who shares his game with the landowner In the case of an invitee the landowner has the additional duty to make the premises safe or to warn of any conditions that cannot be made safe There is a special theory of liability in the case of young trespassers called the attractive nuisance rule A landowner may be liable for injuries to children in cases where he would not be liable to adults under the same circumstances This theory holds that children do not have the same experience or judgment as adults and that they may be strongly attracted to explore certain things such as farm ponds animals or farm machinery The only fault necessary to find the landowner liable is a failure to foresee as a reasonably prudent person would the likelihood that children would be attracted onto the premises Unit 6 Contracts 1 De nition A contract is a voluntary agreement between two or more parties that a court will enforce The rights and obligations created by a contract apply only to the parties to the contract ie those who agreed to them and not to anyone else 11 Elements In order for a contract to be valid certain elements must exist A Competent parties In order for a contract to be enforceable the parties must have legal capacity Even though most people can enter into binding agreements there are some who must be protected from deception The parties must be over the age of majority 18 under most state laws and have suf cient mental capacity to understand the signi cance of the contract Regarding the age requirement if a minor enters a contract that agreement can be voided by the minor but is binding on the other party with some exceptions Contracts that a minor makes for necessaries such as food clothing shelter or transportation are generally enforceable This is called a voidable contract which means that it will be valid if all other elements are present unless the minor wants to terminate it The consequences of a minor avoiding a contract may be harsh to the other party The minor need only return the subject matter of the contract to avoid the contract if the subject matter of the contract is damaged the loss belongs to the nonavoiding party not the minor Regarding the mental capacity requirement if the mental capacity of a party is so diminished that he cannot understand the nature and the consequences of the transaction then that contract is also voidable he can void it but the other party can not Furthermore if the party with diminished mental capacity cannot act in a reasonable manner regarding the contract and if the other party knew of the defect then that contract is void Mental disease alone does not necessarily mean that a party is mentally incompetent for contractual purposes The distinction between a voidable and a void contract is that a voidable contract is enforceable unless avoided by the protected party A void contract cannot be enforced by anyone B Proper subject matter The purpose of the contract must be a legal one in order for the contract to be valid Subject matter is not proper if it is contrary to public policy such as an agreement to commit a tort or a crime or an agreement in restraint of trade immoral the only use of the subject matter is to violate the law or if it violates a statute such as a gambling contract or a usurious contract C O ier An offer is a statement that creates a power of acceptance in the offeree It does not have to be in a certain form However to be valid an offer must be communicated to the offeree it must express an intent of willingness to enter into a contract with serious intent and not as a joke or as merely preliminary negotiations and it must be sufficiently de nite and certain especially with regard to the identity of the pa1ties the subject matter the price and the time and place of performance It is generally effective when the communication is received by the offeree DAcceptance The power of acceptance lies only with the offeree and the acceptance must relate to the terms of the offer with no changes to the terms of the offer or counteroffer if applicable The acceptance is effective when it is dispatched put out ofthe offeree s possession This is called the mailbox rule ifuse ofthe mails is a reasonable method of accepting then the acceptance is effective when posted This rule is interpreted broadly and not limited just to use of the mails The acceptance must be made within any time limit and in any manner as specified by the offer A counteroffer terminates the offer A counteroffer is treated as if it were a new offer Any change to the offer by the offeree results in the termination of the offer and the creation of a counteroffer A grudging acceptance by the offeree includes complaints about the oppressiveness of the agreement but no alteration of the terms of the original offer Grudging acceptances are problematic because they create confusion about whether there has been an acceptance or a counteroffer This may lead to litigation E Consideration To be enforceable a contract must have sufficient consideration Consideration is something of value money labor goods or a promise to act or not act given in exchange for a return promise or a performance and only if the parties intend to make such an exchange Consideration is something that is bargained for and given in exchange for a promise or a performance 111 Types of Contracts An express contract is one whose terms are specifically stated either orally or in writing A contract is bilateral if both the offeror and the offeree make promises Each party must perform and can expect the other party also to perform A contract is called unilateral if only one party makes a promise The offeror the one who makes the promise expects the offeree to accept the offer by actually performing an act not by making a promise to perform the act Newspaper advertisements are not generally offers Ads are considered to be solicitations of offers and do not bind the advertiser The exception is an advertisement of a reward which is treated as an offer to form a unilateral contract Note that other law such as consumer protection statutes or unfair trade practices statutes may impose restrictions on advertisers An implied contact is one where the terms are inferred in whole or in part from conduct and circumstances rather than from written or spoken works The only legal difference between an implied contract and an express contract is the way that mutual assent is given An impliedinfact contract is one where the conduct of the parties and the circumstances of the transaction make it reasonable to assume that the parties had an understanding between them and thus a contract enforceable by the court in spite of the absence of spoken or written words of agreement Also in a case where the circumstances are such that one person should have a right and the other a responsibility in spite of a lack of an intention or agreement for such the court will nd a contract implied by law If there is something that someone ought to do the court will nd that he has an obligation to do it This is actually the opposite of an express contract because here the contract arises from the liability rather than from the mutual intention of the parties and thus it is called a quasicontract It is an alternative remedy called restitution which keeps one party from being unjustly enriched at the expense of the other party IV Statute of Frauds Under certain circumstances a contract must be in writing to be enforceable Most states have adopted a form of a celebrated English law passed by Parliament in 1677 called the Statute of Frauds Under North Carolina law the following types of contracts among others must be in writing a sale of goods for 500 or more a promise to pay the debt of another a promise made in exchange for marriage a promise that cannot be performed within one year from the date of the agreement promises concerning a sale of land and leases that are longer than three years from the date of forming the contract lease V Exceptions to the Writing Requirement A negative result of requiring that certain contracts be in writing is that a person could make an oral promise with the intent of breaking that promise later on the grounds that it was not in writing as required by the Statute of Frauds To prevent this unfair result the court will sometimes enforce an oral contract even when the Statute of Frauds would ordinarily require a writing If there has been partial performance by one party in reliance on the promised performance of the other party and the performing party has relied on the oral agreement to his substantial detriment and the court finds that this performance which conforms to the provisions of the contract would not have occurred without reliance on the agreement then the court will not allow the defense by the non performing party that the agreement was not in writing Another way to avoid a strict application of the Statute of Frauds is the doctrine of promissory estoppel If a promise is made which the promisor can reasonably expect will induce action by the promisee and it does then the promisor cannot raise the Statute of Frauds as a defense that the promise is unenforceable This prevents an injustice from a noncompliance with the writing requirement VI Parol Evidence Rule Even when an enforceable contract exists questions may arise regarding the meaning of speci c terms of the contract and a party may wish to provide evidence outside of the contract to answer the questions Under the parol evidence rule if an agreement is in writing that writing is the best evidence of the agreement between the parties Generally evidence of prior or contemporaneous agreements or negotiations are not admissible to contradict a term of the written contract This means that oral promises made during the contract negotiations are invalid unless incorporated within the written document An exception to this rule exists where there are ambiguous terms in the contract In this case the court will allow additional evidence to clarify the terms of the agreement Oral statements made subsequent to the contract may be admitted to clarify or contradict the terms of the contract unless the contract contains an integration clause the contract speci cally states that the contract may not be contradicted or supplemented by outside written or oral negotiations or agreements VII Remedies for Breach If one party fails to perform a duty under a contract he is said to have breached the contract This relieves the other party from an obligation to perform and also entitles the other party to seek damages or other appropriate relief as a remedy The most common remedy is an award of money damages in an amount to make the injured party whole A jury decides what is a fair amount for this purpose based on the facts of the case The injured party may not feel that monetary damages will be enough of a remedy and may also ask to have the contract performed as agreed This remedy is called specific performance and will usually only be granted where the subject matter of the contract is unique in some way e g the sale of land Another remedy for a breach of a contract is called an injunction which is an order by the court to restrain or compel a requested action For example an employment contract could have a provision that prohibits the employee from taking another similar position with a competitor in the same area The enforcement of this provision after a breach by the employee would be a negative injunction prohibiting an action If an injured party would be more damaged by accepting performance of the contract as proposed by the defaulting party than by getting out of the contract and seeking damages he may ask the court to rescind cancel or terminate the contract and give him restitution such as payment of any benefits already transferred VIII Defenses Sometimes there is a significant change in circumstances between the time a contract is entered and when performance must occur Usually courts do not take intervening events as an excuse for nonperformance However there are some exceptions to that rule One is the doctrine of impossibility The court will excuse performance and terminate the contract if it nds that after entering the contract circumstances have changed to an extent that could not be reasonably foreseen by the parties e g an essential commodity is destroyed or a provider of personal services dies The court may also recognize the doctrine of impracticability In this case the court will excuse nonperformance when that performance even though theoretically possible would involve extreme and unreasonable difficulty expense injury or loss which could not have been anticipated by the parties e g an aerial pesticide applicator loses his only plane in a storm An additional defense is the one of mistake For example if a party believes in the existence of a fact or thing material to the contract which does not in fact exist and he would not have entered the contract without that belief he may be excused from his obligation under the contract eg the sale of an infertile cow that turns out to be pregnant IX Stipulated or Liquidated Damages Parties to a contract can specify in the contract the amount of damages in case of a breach and if that amount is not excessive the court will award the amount stipulated called stipulated or liquidated damages rather than the amount of the actual damages If the amount of stipulated damages is found to be excessive by the court it considers the amount a penalty designed to coerce performance and will not allow the stipulated amount In that case the court will ignore the amount provided in the contract as if it were silent on the issue and assess damages itself On the other hand the court will generally view the stipulated amount as reasonable rather than an excessive penalty if it is an honest estimate of probable loss In deciding whether the amount is reasonable an honest estimate the court looks at whether it is difficult to foresee actual damages or whether a single sum is set as liquated damages for a variety of obligations that would have greatly varying actual losses Contracts may also contain attorney fees clauses that allow the prevailing party to recover reasonable attorney fees and costs associated with any legal action required to enforce the contract X Time Most states have adopted statutes to insure that an injured party files a cause of action within a reasonable time These laws are called Statutes of Limitations and they specify various time limits within which to file an action depending on the state and the kind of action The Statute of Limitations under North Carolina law generally imposes a limit of three years within which to file an action upon a contract Laches is the neglect to assert a right within a reasonable time and which operates to the detriment of the opposing party The court of equity does not aid a palty who fails to protect his own right and thus aches acts as a bar to that palty s ability to bring suit This is the common law equivalent of the statute of limitations Unit 3 Dispute Resolution ARE 306 I Litigation in an adversary system A Parties Plaintiff Petitioner Defendant Respondent Intervenor Amicus curae B Types of courts Administrative Individual adjudication by administrative agencies Trial Power to decide facts and law Appellate Confined to the trial court record Limited to questions of law C Juries Grand Petit D Jurisdiction As to the parties Over the person personal Over property in rem and quasi in rem Inherent in the court General Limited By dollar amount By subject matter By geography E Venue Convenience of the parties F Preliminary matters Standing mootness and ripeness Discovery Pretrial motions Motion to dismiss Motion for summary judgment G Trial Direct examination Cross examination H Posttrial motions Motion for a judgment notwithstanding the verdict Motion for a new trial I Judgments and orders J Appeals As of right Discretionary K Distinction between law and equity Law Relief usually con ned to money damages Equity Relief usually injunctive Temporary restraining order tro EX parte and for short duration Preliminary injunction Designed to preserve relative position of the parties for the duration of litigation Permanent injunction L Class actions and other multiparty litigation II The Federal Court System A Jurisdiction Federal question subject matter Exclusive patents copyrights admiralty bankruptcy Concurrent with the States most federal environmental statutes B Diversity Jurisdictional amount 75000 Complete diversity of citizenship certain large dollar class actions C US Supreme Court Original jurisdiction Ambassadors other public Ministers and Consuls States Appellate jurisdiction All other matters usually by granting a petition for a writ of certiori D Other Article III courts Circuit Courts of Appeal North Carolina is in the Fourth Circuit which also includes Maryland South Carolina Virginia and West Virginia There are 11 circuit courts of appeals plus the DC Circuit and the Federal Circuit The jurisdiction of the 11 circuit courts of appeal and the DC Circuit is geographic The jurisdiction of the Federal Circuit is national and limited to speci c subject matter In addition to its geographic jurisdiction the DC Circuit is assigned the role of reviewing certain environmental and other regulations District courts Each circuit is divided into districts These are courts of original jurisdiction trial courts for most federal cases North Carolina has three districts the Eastern Middle and Western E Article I courts Judges serve for xed terms rather than life Standard of review usually more stringent eg de novo Examples Bankruptcy courts US Court of Federal Claims 111 North Carolina State Courts A Appellate Division Supreme Court Court of Appeals B Superior Court Division Superior Courts courts of general jurisdiction C District Court Division Civil actions with the amount in controversy less than 10000 Juvenile matters Divorce child support etc D Small claims 4000 or less referred to magistrates with appeal de novo IV Alternative Dispute Resolution A Arbitration Bindingnonbinding Voluntarymandatory B Mediation Voluntarymandatory Unit 11 Real Property Acquisition and Disposition ARE 306 1 Contracts for Sale of Land A contract of sale is an agreement to acquire or to dispose of property at some speci ed date Both parties are bound by the terms of the contract An option contract is one by which the owner of property the optionee agrees with another person the optionee that the optionee shall have the right to buy the optionor s property at a fixed price within a certain time The optionor is not bound to make the purchase Subsequent negotiations and counteroffers do not constitute a rejection of the option by the offeree When the option is properly exercised the option contract becomes a contract to sell The option contract must be recorded to give priority over lien holders and subsequent purchasers for value The owner of property may grant preemptive rights to a prospective buyer by contract called right of rst refusal The owner is not bound to sell but if he does he must give the other contracting party the first right to buy In order to comply with the Rule against perpetuities the right of first refusal must vest within 21 years or less after the death of a life in being at the time the contract is signed If it does not the contract is void even if an attempt at exercise is made earlier than that time A contract of preemptive rights must contain a reasonable price provision linked to a fair market value or price that the owner is willing to accept from a third party Real estate contracts can be classi ed as either interim or longterm The interim contract is typically of short duration maybe several months and results in a transfer of legal title and possession at a specified future date Under the Statute of Frauds a contract for a sale of real property must be in writing to be enforceable No particular form is required and the writing will be sufficient for this purpose if it is signed by the party to be charged there is a description of the subject property a legal description is not required but is preferred and all elements of the contract are present The basic requirements for a real estate contract are described in the Rawls case quotA contract for the sale of real property must meet the following requirements be in writing signed by the parties contain an adequate description of the real property recite a sum of consideration and contain all key terms and conditions of the agreementquot As most real property is transferred under general warranty deeds it is necessary that the seller provide marketable title To ensure this the closing attorney prepares an abstract that is a history of the property complete with any encumbrances or other title defects listed In general the title is considered to be marketable if a title insurance company will cover the property without significant exceptions There are two types of title insurance lenders and owners The former protects the lender for the balance of the loan remaining and the latter protects the purchaser for the amount of the purchase price The title insurance company also agrees to pay for the cost of defending the title against a law suit by another claiming title If either party fails to perform breaches the contract the other has a right of action for specific performance rescission and restitution and or damages Under the parol evidence rule evidence outside the four comers of the contract is not admissible unless it is offered to show fraudulent inducement mutual mistake or to resolve an ambiguity A longterm contract for sale often called an installment land contract is used primarily as a nancing device The buyer becomes the beneficial owner and takes possession of the property but the seller retains legal title usually for many years until the final installment payment is made The seller gets the income tax advantage of stretching out his recognition of capital gains While the land is in the buyer s possession he must not allow waste of the property and he is obligated to pay the property taxes If the buyer departs substantially from the terms of the contract the seller can forfeit the buyer s interest and retake possession of the property 11 Deeds A deed is an instrument of writing which has been signed sealed and delivered and serves to transfer an interest in real property from a grantor to a grantee A general warranty deed not only conveys the land but it also contains assurances that the title is free from defects and encumbrances and that the grantor will protect the grantee from any claims that might arise from the grantor s ownership interest A special warranty deed promises that the title is free from defects and encumbrances that may have arisen since the grantor acquired title but it does not promise that anyone else other than the grantor has not caused defects in the title A quitclaim deed conveys only the interest of the grantor in a specific property but it does not convey the land itself There are no promises made in this deed regarding the title and it is primarily used to clear titles All who have even remote interests in the property even if too small to have value can relinquish that interest by means of a quitclaim deed In order to have a valid deed there must be a competent grantor and a grantee capable of holding title In addition to the names of the grantor and the grantee the deed must also contain a sufficient description of the property the operative words of conveyance and a proper execution by the grantor including his signature and his seal The final requirement for a valid deed is delivery of the deed to the grantee and his acceptance of it North Carolina law requires the placement of an excise tax on the deed The excise tax is assessed at 100 for each 500 or fractional part thereof of property transferred This tax is still called the excise stamp tax because the tax until recently was assessed through the sale of stamps that were required to be affixed to the deed The advent of electronic property records has rendered the use of stamps obsolete and the General Assembly has amended the statute to reflect this The promises that can be made by the grantor in a deed include 1 covenant of seisin and right to convey the grantor has good title and has the right to transfer the land 2 covenant against encumbrances no debts or other encumbrances burden the land except those described in the deed and 3 covenant of warranty and quiet enjoyment the grantee can rely on the facts presented by the grantor and the grantee will not be disturbed by a third party s lawful claim III Security Interests A mortgage is a security interest in real property that guarantees the payment of a debt Always in writing it is a contract between the mortgagor the borrowerdebtor and the mortgagee the lender creditor The borrower who owns the land gives a mortgage to the lender to secure a debt The underlying debt is evidenced by a promissory note The security interest is perfected by recording the mortgage in the place where property records are recorded the office of the register of deeds in the county in which the property is located in North Carolina North Carolina law also recognizes a deed of trust as a real property security instrument A deed of trust is an instrument by which a debtor transfers title in real property to a disinterested third party the trustee to be held in trust for the beneficiary the creditor as security for the performance of an obligation the payment of a debt If the debtor defaults on the loan the creditor can sell the property at a foreclosure sale and can bid on the property at that sale A deed of trust arrangement is a three party security interest in real property whereas a mortgage is a two party arrangement North Carolina is a title theory state so the mortgagee holds legal title to the property The holder of legal title is forbidden to bid at a foreclosure sale so deeds of trust are more commonly used in North Carolina so that the lender can bid at the foreclosure sale A mortgage is drafted as either a conveyance of the property to the mortgagee the title theory or as a lien to secure payment of a debt the lien theory North Carolina law recognizes the title theory which states that even though the mortgagee lender acquires title he does not acquire the right of possession until the mortgagor borrower defaults In order to avoid an unfair result if there is an excess of the property value over the debt when the mortgage retains the property after a default the mortgagee returns the excess amount to the mortgagor Under the lien theory the mortgagee s interest is limited to the amount of the remaining debt plus interests and costs because the mortgage is considered as merely a lien on the property to secure the debt rather than a conveyance of legal title The mortgagor retains title until a foreclosure sale In order to avoid the harsh result of a strict foreclosure the mortgagor has an equity of redemption after he defaults on his debt This means that a defaulting mortgagor may prevent foreclosure by paying the full amount of the mortgage debt plus interests and costs before the foreclosure sale including the expiration of any upset bid period Once the upset bid period is over this right is extinguished Note that unlike North Carolina some states extend the equity of redemption for as long as two years after the conclusion of the foreclosure sale Some of these states also extend the right to redeem the property to persons related to the debtor A debt payable in installments usually contains an acceleration clause that states that the entire debt including interest due will be due and payable immediately if the mortgagor fails to pay any installment when due Similarly a due on sale clause is an acceleration clause that authorizes a mortgagee or deed of trust bene ciary to accelerate the due date of the entire loan balance if the mortgagor transfers the property and the mortgage or deed of trust without the permission of the mortgagee A foreclosure sale can result from an action brought by the mortgagee or trustee where if the court finds a default it orders a judicial sale of the property Judicial foreclosures are also called foreclosures by action The debt is satisfied from the sale proceeds and the excess if any is paid to the mortgagor If the proceeds are insufficient to pay the debt the mortgagee can obtain a personal judgment against the mortgagor for the deficit This is called a deficiency judgment Another way to foreclosure is through a power of sale clause in the mortgage contract or deed of trust That clause permits the mortgagee to sell the property without a court proceeding upon default by the mortgagor To protect borrowers from overreaching by creditors North Carolina law requires that foreclosures by power of sale be conducted under judicial supervision However a foreclosure is conducted NCGS 452138 prohibits a deficiency judgment after foreclosure if the mortgage or deed of trust is part of the purchase price of the property IV Methods of Sale Buyers and sellers can be brought together in several different ways For example a private agreement is a contract between two individuals without the intervention of a third party The buyer and the seller must decide on a price that is mutually acceptable Another method of transferring land is through a licensed broker or agent Here also the price is determined by mutual agreement of the buyer and seller but many potential buyers may look at the property and offers from several people may be made Because of his expertise the broker can advise the seller about what is a reasonable price A typical real estate sales office is supervised by a broker who may employ many agents who work for him as independent contractors Brokers and agents are licensed and regulated by the North Carolina Real Estate Commission The real estate agents are in legal terms agents of the broker The arrangements under which a broker works include seller agency buyer agency and dual agency A broker who is a seller39s agent works primarily for the seller and is under a duty to inform the seller of any material information that is revealed to him by the buyer The seller39s agent is also under a duty not to reveal such information about the seller to the buyer With a buyer39s agent the situation is reversed and the buyer39s agent is representing the buyer In dual agency the broker may not reveal buyer39s or seller39s con dential information Detailed discussion of agency arrangements is beyond the scope of the material When a property owner uses a broker there are four different types of agency arrangements that may be used Under an open listing arrangement the broker receives a commission only if the procuring cause of the sale Any other broker may also procure a buyer and receive the commission If the seller procures the buyer there is no commission due Under an exclusive agency arrangement the listing broker is the only broker authorized to sell the property and receive a commission However if the seller procures a buyer independently of the broker no commission is due Under an exclusive right to sell arrangement the broker is entitled to a commission no matter who sells the property Multiple listing arrangements are sharing arrangements between brokers that allow all participating brokers to sell each others listings in return for an agreedupon share of the commission Listing arrangements as with all agency arrangements are personal service contracts Where a broker is the procuring cause if a sale the NC Court of Appeals has held that the broker is entitled to a commission even though the listing contract expired prior to the time that a contract to purchase he listed property was signed Sessler v Marsh 144 NC App 623 disc rev denied 354 NC 365 2001 An auction is a public sale of property to the highest bidder This is often used when competition for the particular land already exists when the sale must be made by a certain date or when the value of the property is difficult to determine Auctioneers must be licensed Typically an auction is conducted with ascending bids with the highest bidder buying the property Such auctions may be conducted quotwith reservequot or quotwithout reservequot When an auction is conducted with reserve the property does not sell unless a minimum reserve price is reached Whether the auction is with reserve or without reserve must be announced to the bidders in advance Another type of auction is a reverse or Dutch auction where the auctioneer starts with a high price and lowers it until a buyer is obtained A final method of bringing together a buyer and a seller is by sealed bid The potential buyers only bid once and without any knowledge of competitors bids Many prospective buyers do not like this method since they are operating without full knowledge Unit 4 Regulation Legislation and the Political Process Administrative agencies are created by Congress or the General Assembly at the state level to carry out its laws Administrative agencies have three functions legislative adjudicatory and administrative Administrative agencies have no power except that delegated to them by Congress Statutes passed by Congress set the parameters for regulation but often lack speci c details Agencies ll in the gaps in statutes by developing regulations based upon the authorizing statutes This process is called rule making Rule making is the legislative function of agencies Sometimes individuals have disputes with regulatory agencies The process by which agencies resolve these disputes is the adjudicatory or judicial function Agency also manage government property and programs these are the administrative or executive functions of agencies Rule making is governed by the Administrative Procedure Act APA there is a state equivalent There are five steps in rule making 1 Review of the proposed rule by the Office of Management and Budget OMB 2 Notice of the proposed rule published in the Federal Register 3 Receipt of public comments 4 Review of the draft final rule by OMB 5 Publication of the final rule in the Federal Register Once the final rule is published it becomes law There are three types of rule making they are different only at the public comment stage In informal rule making the agency receives only written unswom comments In formal rule making the agency formal public hearings where witnesses are sworn and subject to cross examination In hybrid rule making unswom written comments are accepted and informal public hearings are conducted Witnesses in an informal public hearing are not sworn and are not subject to cross examination Hybrid rule making is the variety most often used by agencies There is also exempt rule making that is not subject to these steps Military and national security matters where secrecy and speed are of essence are exempt from the requirements of the APA There is also an exemption for emergencies An emergency rule may be issued without public comment however public comment must be taken after the rule issues and the rule is subject to revision based upon the comments received There are also exemptions for interpretive rules and general policy statements These last two categories purport to merely state the manner in which an agency will enforce existing law without adding to or subtracting from that law Courts take a highly skeptical view of exempt rule making because it provides little or no opportunity for public comment Public comments are a key part of the rule making process It is the expertise that the public provides through their comments that help the agency improve the quality and workability of their rules no agency can have within it all of the expertise needed to develop a rule so agencies must rely heavily upon public comment Early in my career I served as an economist in the Agricultural Stabilization and Conservation Service now the Farm Service Agency of the US Department of Agriculture where I was involved in preparing rules regulations governing the commodity and conservation programs Part of the job included reviewing public comments The work gave me a feel for the type of public comments that have the most impact The post cards distributed by interest groups to their members contain little information and have little impact Abusive or threatening comments likewise have little impact The most useful comment is an individual letter that is wellreasoned and documented I have seen a single such comment result in significant changes to a final rule Rules made by agencies are subject to judicial review There are four grounds upon which a court might set aside an agency s regulation First if the statute authorizing the regulation is unconstitutionally vague Congress violates the Constitution when it gives blanket authority to an agency The statute must set out the agency39s authority and the limitations on that authority with sufficient specificity to satisfy the Constitution There is a large body of decided cases that defines the border between that which is sufficiently specific and that which is not Second the statute authorizing the regulation may itself violate the Constitution If the authorizing statute violates the Constitution then the regulation based upon the statute may not be constitutional either Even if the statute itself is constitutional it is possible for the regulation to violate the Constitution Third the regulation may exceed the authority granted in the statute Fourth the agency may have failed to follow the correct procedure in issuing the regulation The Administrative Procedures Act governs the development of regulations The failure to follow the APA may be fatal to any regulation even if the regulation is otherwise valid The second role of any agency is similar to that of he court system Agencies resolve disputes between agencies and individuals affected by agency actions Administrative law judges or hearing officers generally hear these cases Most agencies try to make their administrative law judges independent of the parts of the agency from which the dispute arose Of course achieving this in practice is difficult and this is often a source of contention If an individual is dissatisfied with the decision reached within the agency then that individual may ask a court to decide the dispute However courts will generally not hear disputes with agencies until all remedies within the agency have been exhausted As a practical matter environmental law is mostly administrative law courts are very reluctant to overturn agency decisions Most environmental disputes are settled by the parties and most of those that are not are decided within the agency adjudicatory process Agencies also have executive or administrative functions These duties include advising the President and his cabinet and staff conducting research issuing permits managing property and administering contracts and grants EPA has an important research facility here in the Research Triangle Park EPA39s weather model that predicts the transport of air pollutants is based here Forty percent of the land in the United States is govemmentowned so managing property is very important and can have major environmental consequences Congress has required that much of EPA39s mission be carried out through grants to governments universities and the private sector Limitations on the power of agencies include constitutional statutory and institutional As discussed above no agency can act absent constitutional and statutory authority Institutional arrangements further limit the power of agencies These limitations have their sources in all three branches of government The President appoints agency heads and can also re the heads of executive agencies at will The OMB makes budget recommendations for each scal year And the OMB reviews proposed and nal rules prior to their publication in the Federal Register The President also has the power to issue executive orders that limit agency authority Judicial review has already been discussed all agency actions are subject to judicial review Congress exercises its authority over agencies in several ways There are oversight committees for each agency These committees can compel agency of cials to explain their actions to them If Congress is particularly upset with an agency s action it may repeal the agency s enabling statute At that point the agency ceases to exist and its employees must look for other work A less drastic remedy that congress employs is to modify the enabling statute to force the agency to comply with the wishes of Congress Can can also control agencies through the budget process Congress may provide no funding for activities that it does not like or it may require that certain monies be spent on projects that it does like Nominations of all political appointees to agency of ces are subject to the advise and consent of the Senate There are three basic types of federal agencies Executive agencies report to the President and their of cials serve at the pleasure of the President which means that the President can re them without prior notice and without reason or for any legal reason Independent agencies are independent of the executive branch Their heads are appointed by the President but they serve for fixed terms and may not be red by the President Congressional agencies are creatures of Congress whose of cials serve at the pleasure of Congress The General Accounting Of ce GAO is an example of a congressional agency The GAO often audits executive agencies r quot 39 for r quot the 39 The EPA is unique among independent agencies in that its head serves at the pleasure of the President This is he result of the process by which EPA was created It was created by an executive order signed by President Nixon Resolution of Environmental Disputes Negotiating with Regulatory Agencies Mediation Arbitration amp Litigation Regulatory agencies may sanction violations of environmental laws through civil or criminal actions or both Federal criminal prosecutions are conducted by the Justice Department in cooperation with the subject matter agency In criminal prosecutions the government must prove its case beyond a reasonable doubt Defendants in criminal cases have a seventh amendment right to a jury trial Regulatory actions begin with investigation by the regulatory agency Investigations are initiated by two alternative routes citizen complaints or a neutral inspection scheme A neutral inspection scheme is one under which no member of an industry is more likely to be subjected to inspection than any other member of the group with similar characteristics There need be no suspicion of wrongdoing in order to conduct an inspection under a neutral inspection scheme Numerically the largest number of investigations are initiated as the result of citizen complaints to the regulatory agency Inspections however initiated require a warrant in order to satisfy the fourth amendment unless the subject of the investigation consents to the inspection The probable cause needed for a warrant is low courts almost never deny agency requests for warrants Whether a subject should voluntarily consent to inspection or should require a warrant is a subject often discussed In general the inspection can be expected to be less adversarial if consent is given however the subject should involve their attorneys in the discussion with the agency so that the scope and objectives of the inspection are clearly defined After conducting the inspection the agency has several options It may conclude that their are no violations and that no further action is warranted If action is warranted the agency may issue an administrative order that defines the action to be taken by the subject to bring itself into compliance For more serious violations the agency may assess a civil fine in addition to requiring remedial action For violations that appear to involve criminal misconduct the agency may refer the matter to the Justice Department for review Attorneys in the Justice Department will determine whether the subject should be indicted Should the subject disagree with the terms of an administrative order or fine it may use the agency s internal appeal process Different agencies have different appeal processes some are much more formal than others Generally the appeal is heard by an administrative law judge An administrative law judge is an agency empoyee who is independent of the agency employees involved in issuing the order or fine If the subject is disatisfied with the results of the agency s internal appeals process it may then appeal to an appropriate court for relief In the alternative the subject may ignore the agency s order andor fine and force the agency to tke it to court Under some circumstances an interested party may challenge an agency s regulation without waiting for an enforcement action The course that a regulated party takes in a dispute with the agency will depend on its circumstances the statute involved and the risks associated with each alternative course of action The standard of review that is applied is an important consideration For challenges to many regulations the standard of review is abuse of discretion a difficult standard to overcome For a court to find that an agency has abused its discretion the court must find that there is no rational basis for the agency s action In addition to those actions brought by federal and state agencies environmental disputes may arise between private parties Many environmental statutes have citizen suit provisions that permit private parties to enforce environmental laws through civil lawsuits There are also other common law and statutory actions that may involve environmental issues There are alternatives to the courts for resolving environmental disputes These alternatives are often cheaper than litigation and can reduce the level of acrimony associated ith disputes This can be particularly important where the parties must continue to deal with each other after the dispute is resolved The two basic types of alternate dispute resolution are arbitration and mediation In arbitration a neutral third party hears the disputes and makes a decision resoling it The result may be either binding or nonbinding If binding the parties are obliged to abide by the decision if nonbinding the parties may either agree to follow it or ignore it and proceed to litigation Mediation involves a neutral third party mediator who helps the parties reach a resolution of their deision but does not decide the issues as an arbitrator would There are various variations of these techniques some involve court supervision while others do not Unit 18 Forms of Business Organization ARE 306 1 Sole Proprietorship A sole proprietorship is the form of business where one person owns all of the assets and is responsible for all of the debts in contrast to a partnership or a corporation The income is reported on the individual s Form 1040 II Partnership A partnership is an association of two or more persons to conduct a business for profit The relationship is consensual and usually contractual A partnership is treated as an entity for litigation holding title to property and bankruptcy proceedings North Carolina has adopted the Uniform Partnership Act UPA Under the UPA the partners must have equal management authority and share equally in profits and losses They have an equal obligation to contribute their time energy and skill without compensation to the partnership business Each partner has unlimited personal liability to the creditors of the partnership and all partners are liable for wrongful acts and breaches of trust by any partner A partnership files a federal information taX return Form 1065 annually However all income ows through and is taxed to the individual partners A partnership interest is personal to the partner The partnership is dissolved by the death of a partner or by the sale of a partnership share Most provisions of the UPA can be modified in a written partnership agreement e g capital contributions management sharing of profits and losses rights and obligations terms of property ownership termination and dissolution and buysell agreements A limited partnership has the characteristics of both a partnership and a corporation It is used when some partners do not want management responsibility nor unlimited liability for the business venture North Carolina has adopted the Revised Uniform Limited Partnership Act RUPLA Under this statute a limited partnership is formed by at least one general partner and one or more limited partners A general partner manages the partnership and has full personal liability for the debts of the partnership A limited partner contributes cash or other property His liability for partnership debts is limited to the amount of his investment in the partnership Limited partners do not participate in the management of the partnership A limited partnership also frles an information taX return but income is taxed to the individual partners 111 Limited Liability Company LLC The LLC is a distinct entity that is a hybrid of a partnership and a corporation North Carolina law authorized this type of business entity effective 10193 It can be treated like a partnership for taX purposes The IRS allows an LLC to choose check the box whether to be taxed as a corporation or as a partnership Like a corporation the members have limited liability for debts of the LLC This business entity offers more exibility because of its hybrid nature The LLC is not allowed to have an unlimited life as a corporation is but it may have orderly transfer provisions Membership interests are not freely transferable without consent of all other members but a member may assign his economic but not voting rights The statute now requires only one member to create an LLC The statute originally required at least two members This business entity is often used in estate planning because it can be an efficient way to transfer assets over time to the next generation IV Corporations Corporations are formed under state statutes A corporation is a legal entity that has rights and liabilities separate from its shareholders A shareholder of a corporation is only liable for the debts of the corporation to the extent of his investment in the corporation Shareholders elect a Board of Directors who set policy and appoint officers to manage the company on a daily basis Shareholders do not participate directly in management decisions unless they are also directors or officers A corporation has a potentially unlimited life and it is not dissolved by the death of a shareholder director or officer A corporation formed under Subchapter C of the Internal Revenue Code is an ordinary corporation subject to double taxation which means that profits are taxed as they are earned by the corporation and then when those profits are distributed to the shareholders as dividends they are taxed again to the individual A corporation formed under Subchapter S is a close corporation that has elected to be taxed like a partnership Instead of being taxed at the corporation level the income ows through to the shareholders and is only taxed once at the individual level whether the profits are distributed or not Generally shares of stock are freely transferable by the stockholder However North Carolina law permits the creation of restrictions on stock transfers by the articles of incorporation bylaws an agreement among shareholders or an agreement between shareholders and the corporation A restriction must be authorized by the statue and not unconscionable under the circumstances and there must be a conspicuous notice of the restriction on the certificate or in the information statement required by the statute One type of restriction would be a buysell agreement between a stockholder and the corporation or other stockholders requiring the selling stockholder to offer his stock first to the other party to the agreement The agreement would set a price to be paid for the shares which would be particularly useful if the shares were not publicly traded Shares in a corporation can be defined as common or preferred based on the rights and privileges that belong to the owner Common stock represents a fractional proprietary interest in the property and assets of a corporation Therefore the common shareholder participates on a pro rata basis in the distribution of corporate assets upon dissolution participation in corporate profits dividends and management of corporate activities right to vote Traditionally holders of preferred stock are not creditors of the corporation and therefore do not share in corporate assets upon dissolution Instead they have a right to a fixed dividend due and payable before any dividends to common shareholders However the articles of incorporation can grant rights to preferred shareholders to receive preference over common shareholders with regard to distributions of dividends and corporate dissolution proceeds The shareholders are the actual owners of the corporation and ultimately they choose the people who will manage the company Under North Carolina law the shareholders must elect a Board of Directors to whom they delegate the power of management The Board is responsible for all of the business affairs of the corporation such as issuing shares of stock and the rights of the shares issued the sale of corporate assets mortgaging corporate assets declaring dividends and the election of corporate officers The senior management of the company represented by the Chief Executive Officer CEO and the senior management team are responsible for the daytoday operations of the corporation Their authority and duties are prescribed by the bylaws and the Directors The Articles of Incorporation must be filed with the North Carolina Secretary of State and they must contain the following information 1 a corporate name 2 the number of shares that may be issued 3 the street address and mailing address including county of the initial registered office and the name of the initial registered agent and 4 the name and address of each incorporator This document may also provide 1 the names and addresses of the initial Board of Directors 2 provisions regarding the business purpose and par value of shares etc and 3 limitations on personal liability of directors At the organizational meeting of the corporation bylaws should be adopted This document may contain any provisions for managing the company and regulating the affairs of the company that are legal and consistent with the Articles of Incorporation The bylaws are the continuing set of governing rules under which the corporation its officers directors and shareholders exercise management powers transfer shares hold meetings and all other activities related to the corporate objective There are two ways to dissolve and terminate a corporation voluntary dissolution and involuntary dissolution The directors and shareholders may voluntarily dissolve a corporation by passage of a resolution of dissolution and filing of articles of dissolution with the Secretary of State In addition a corporation may be dissolved without its consent by court action or administrative action of the Secretary of State If the directors are not acting in the best interest of the company any shareholder may obtain judicial dissolution If the corporation fails to file annual reports or pay franchise tax for example the Secretary of State may administratively dissolve the corporation UNIT 18 FORMS OF BUSINESS ORGANIZATION ARE 306 I Sole proprietorship II Partnership A De nition An association of two or persons to conduct a business for pro t B Uniform Partnership Act adopted by NC 1 equal management authority 2 equal shares of losses 3 equal shares of pro ts 4 equal obligation to contribute effort 5 unlimited personal liability 6 Federal information return Form 1065 required however all income taxed to the individual partners 7 personal dissolved by the death of any partner or the sale of hisher share 8 may own property in the partnership name tenants in partnership 9 most provisions of the UPA may be modi ed in a written partnership agreement capital contributions management sharing of pro ts and losses general statement of rights and obligations terms of property ownership termination and dissolution buysell agreements C Revised Uniform Limited Partnership Act Revised UPLA adopted in NC 1 Liability of limited partners limited to their investment 2 No management role for limited partners 3 Must have at least one general partner 4 Information return required taxed to individual III Limited Liability Company LLC Effective October 1 1993 Treated as a partnership for tax purposes check the box rule Limited liability Flexibility Cannot have unlimited life but may have orderly transfer provisions Membership interests not freely transferable however economic but not voting interests may be assigned May have one member Useful estate planning vehicle TUP39JUOPUFD F9 Corporations WUOW QT H Authorized by state law Limited liability Continuity of management Potentially unlimited life Taxation Subchapter C Subchapter S Restrictions on stock transfers buy sell agreements Shares common preferred Management structure shareholders directors CEOsenior management Documentation articles of incorporation bylaws Liability of owneroperators Dissolution Unit 7 ARE 306 Nuisance and Other Common Law Solutions to Environmental Issues 1 Right of landowners to Lateral and Subj acent Support the right exists without regard to whether the neighboring landowner was negligent right applies only to land in its natural state if the land is improved there is no absolute right to support 11 Air and Light limited availability of common law action 111 Remedies in Tort A Trespass Trespass is the unauthorized entry physical invasion of onto the land of another It is an intentional tort The tort may be found even though no damages exist The tort exists to protect the landowner s right to possession B Nuisance 1 De nition The tort of nuisance exists to protect the landowner s right to quiet enjoyment of her property A physical invasion of the plaintiffs property is not an element of the tort of nuisance 2 Types a Public affects a large group of people Any action to abate it must be brought by the representative of a governmental unit In addition to a civil action brought by a governmental unit the governmental unit may also prosecute the alleged perpetrator of a public nuisance under criminal law b Private involves a particularized injury to a specific individuals landowner The injured individuals landowner may bring a tort suit against the alleged perpetrator c A nuisance may be both public and private if a large group is affected and in addition some individuals have particularized injuries Possibly because of this factual ambiguity courts and attorneys have not always distinguished between public and private nuisances 3 Theories private nuisance a Strict liability b Intentional most frequently used basis for nuisance suits c Negligence Elements 1 Existence of a duty 2 Breach of that duty 3 Causation in fact and legal causation Proximate cause 4 Damages must be actual 4 Relief private nuisance a Abatement injunctive relief b Damages money c Both 5 Balancing of hardships and benefits IV RighttoFarm laws V Economic Impact of the Common Law Approach Extemalities B Lack of guidelinesImpact of uncertainty on business decisions Unit 1N Introduction ARE 306 Law is a complex subject The purpose of this course is to prepare students for life after graduation by making them aware of some of the more important legal issues in agriculture and agribusiness As a result of taking this course students should understand where to nd important legal materials be able to identify the existence of a legal problem find appropriate legal assistance and be better citizens and more informed voters So that I may better understand the needs of the students in the class I ask for some basic information that is listed in the Unit 1 outline For oncampus students an index card will be provided in the first or second class Distance students are asked to email this information to me Unit 15 Tenancy ARE 306 1 De nitions A lessee is one who occupies the property of another the lessor with permission for a payment known as rent 11 Essential Elements of LandlordTenant Relationship A Contract between the landlord and the tenant includes all ve elements of an enforceable contract B Provisions for payment of rent C Transfer of estate substantial rights to the tenant D Possession and control in the tenant E Reversionary interest in the landlord F Real estate or an interest in real estate must be the subject matter III License arrangements distinguished from landlordtenant relationships A license arrangement is a right to use property that does not rise to the level of a landlordtenant relationship The licensee typically lacks both possession and an interest in real property The classic example of a license arrangement is a parking space rental in a public parking facility IV Employment Relationship Distinguished An employee is paid a wage to produce a crop and has no legal interest in the farm He also has no legal interest in the crops until they are set aside at harvest as part of his wages if applicable If the employer fails to pay wages due generally the employee s only remedy is to sue for breach of contract For an employee the employer is responsible for proper withholding of taxes from wages The wages are considered earned income for tax purposes If the IRS successfully recharacterizes a share lease as an F J the tax consequences to both the landowner and the tenant are usually disastrous This danger is particularly great with oral share lease agreements that have not had professional review I On the other hand a tenant is entitled to exclusive use and possession of the real estate A tenant may sue the landlord for trespass The crops belong exclusively to the tenant until divided for payment of rent if applicable The landlord may have a lien in the crop A tenant can deduct his expenses from his income in calculating his taxable income A tenant pays selfemployment tax in lieu of withheld taxes The tenant is responsible for injuries to invitees or licensees if due to his poor upkeep V Partnership Distinguished This distinction is important because when a partnership exists all partners are individually liable for all debts and obligations of the partnership There is also special tax treatment of a partnership e g income and losses of the partnership are passed through to all partners NCGS 42l states that the mere existence of a lease cannot be used to prove a partnership Oral lease agreements in particular raise the danger of recharacterization It is not uncommon for bankruptcy courts to recharacterize share lease agreements as partnerships This allows the bankruptcy creditors to reach the landowner s assets VI Statute of Frauds Under the Statute of Frauds a writing memorializing the lease is generally required for an agreement that cannot be performed within a certain time from the date of execution In North Carolina a lease must be in writing if it is not capable of completion within three years from the date of making VII Recording A lease should be recorded with the register of deeds in the county where the property is located This protects the tenant from a sale or foreclosure during the term of the lease unless the lease expressly provides otherwise VIII Classi cation of Tenancies A tenancy from year to year is a periodic tenancy that can last inde nitely It is deemed to automatically renew itself unless adequate notice is given to end the lease It can be created by an oral agreement or by a written agreement Under NCGS 4223 agricultural tenancies in listed counties are from December 1 to December 1 This applies to oral leases where the beginning and end are not specified A tenancy for years or for a term is a tenancy measured by time It lasts for a specified time agreed upon in the lease and the tenant s right of possession automatically terminates at the end of the term unless it is renewed by mutual agreement the exception is where NCGS 4223 results in renewal It is usually created by a written agreement A tenancy at will can be terminated by either party at any time This tenancy can be created by express actions of the parties or by implication A tenancy at sufferance is the relationship between a landlord and a holdover tenant one whose lease has expired and who has not yet vacated the premises This condition can only exist for a short period of time after which the tenant will be considered a tenant from year to year if the landlord allows him to retain physical possession ofthe property In the case of a share lease agreement where the landlord shares in the crops as part of the rent the tax issue is whether there is material participation by the landlord which would result in the landlord having to treat his rental income as earned income for self employment tax purposes IX Notice to Quit At common law the notice requirement for termination of a lease is six months for a year to year tenancy However NCGS 42l4 sets out speci c requirements for giving notice to quit I for a year to year lease 7 one month 2 for a month to month lease 7 seven days 3 for a week to week lease 7 two days 4 for rental of space for a manufactured home 7 30 days regardless of the length of the tenancy and 5 whatever longer notice is specified by the lease X Duties of Tenant A Pay rent B Do not commit waste Voluntary waste results from a decisive action such as removing topsoil or cutting timber Permissive waste results from a failure to do something such as rotate crops or plant cover crops On the other hand an ameliorating waste is one that results in a physical change to the property by an act of the tenant and that adds value and improves the property a tenant is not held liable for this waste but may be enjoined from proceeding C Reasonable use The tenant is expected to conduct the farm business according to wellestablished customs or usages of the region D Farming in a husbandlike manner The tenant has the right to determine the cropping system as long as he does not injure the land He is not required to yield the land in the same condition it was in when he took possession E Avoid exhaustion of soil through negligence or improper use F Make repairs XI Risk of Loss The tenant s common law duty to make repairs means that the tenant insures the condition of the property North Carolina law expands on this duty NCGS 429 states that an agreement to repair is unenforceable if more than 50 of the value of a residence is destroyed by an accidental fire not resulting from tenant s want of diligence NCGS 4210 exempts a tenant from responsibility for accidental damage if there is no agreement to repair NCGS 42 12 allows a lessee to surrender the premises where the purpose of the lease is destroyed unless the lease states otherwise XII Crop Ownership Generally a crop belongs to the tenant until it is harvested and divided Under NCGS 42 15 a landlord is given a lien against crops for rents advances etc It attaches as soon as the crop starts to grow and it is superior to all other liens The Food Security Act of 1985 provides for centralized filing of landlords liens because in order to prevail against third parties the landlord must show that the purchaser knew that the crop was grown on rented land An exception to the common law rule that growing crops follow the title to real estate is the right to emblements When a tenant s lease expires through no fault of his own he may return and harvest the crop if it was seeded before notice of termination Under NCGS 427 when a lease for years is terminated by an uncertain event determining the estate of the lessor or by foreclosure the tenant can hold out for a year with rent apportioned in lieu of the right of emblements He is also entitled to reasonable compensation for any tillage and seed for any crop not gathered by the end of the current year XIII Right to Sue The tenant has the exclusive right to a claim for damage to his crops subject to the landlord39s lien in the crops and any proceeds On the other hand the landlord has the right to a claim for damage to his land and fixtures These rights may be allocated differently by express provisions of the lease XIV Liability for Injuries on Leased Property Generally the landlord is not liable to the tenant or to third parties for injuries caused by conditions on the premises There is an exception to this if the injury is caused by a hidden defect and the landlord knew or should have known about it but failed to disclose it to the tenant A tenant s liability is similar to that of an owner in possession If the tenant knows or should have known of a defect and fails to correct it he will be liable for resulting injuries even if the landlord has agreed to make repairs A landlord will not ordinarily be held liable for the negligence of a tenant XV Assignments and Sublets Generally a tenant may not assign a lease or sublet a farm unless specifically permitted to do so by the lease agreement If a valid assignment or sublease is made the new tenant has the same rights against the landlord as the original tenant had The distinction between a sublet and an assignment is that in an assignment the original tenant has transferred his entire interest in the property whereas in a sublet the original tenant has retained some interest and is in effect the landlord of the new tenant XVI Eviction If a tenant fails to vacate the premises after the termination fo the lease a landlord has the remedy of eviction He may not resort to self help to remove the tenant but rather he must le a motion in court unlawful detainer Other grounds for eviction include when the tenant fails to pay the rent due within 10 days of a demand for such or violates any other material term of the lease and fails to remedy the violation after notice Under these circumstances the tenant also forfeits the remainder of the lease term A landlord who resorts to self help may be liable for punitive damages XVII Right of Tenant to Remove Fixtures A tenant may remove from the premises any items removable xtures that were erected by the tenant if they are not so physically attached to the land or building that severance would be impractical or that severance would not cause permanent damage to the remaining property Removable xtures such as individual hog houses or grain bins not in concrete foundations are distinguished from improvements such as fences The tenant may remove any xture for which the landlord grants permission XIX Farm Program Payments In reaching the terms of a lease agreement the tenant and the landlord should consider any effects on eligibility for program payments There are two important restrictions on receipt of such payments First a landowner is limited in changes that may be made in a tenancy arrangement if the effect of the change reduces the tenant s rights to share in the program bene ts Second the payment limitation rules contain a number of speci c provisions applicable to tenancy arrangements For example to be eligible for any bene ts a person must be actively engaged in farming If a landowner leases land for a set amount of cash rather than an amount based on productivity of the farm he may not meet the actively engaged in farming requirement If the landlord is ineligible then the tenant must make a signi cant contribution of 1 active personal labor m capital land or equipment or 2 active personal management equipment XX Residential Leases Residential leases are governed by contract law and by real property law One of the laws applicable to residential leases is that a landlord is not allowed a retaliatory eviction if the tenant adheres to the provisions of the lease An eviction is retaliatory if made in response to a tenant39s assertion of a legal right Hotels and motels are not considered to residences and dwellings furnished without charge are exempt from these laws Mobile homes are included as residences The duties of the landlord include 1 provide t premises 2 comply with all building and housing codes 3 make repairs necessary to keep the property in a habitable condition 4 keep the common areas in good condition 5 maintain all equipment electrical plumbing sanitary etc and 6 provide smoke detectors The duties of the tenant include 1 keep the tenant s part of the premises clean and safe 2 dispose of waste properly 3 avoid deliberate destruction of the property 4 comply with building and housing codes 5 be responsible for damage occurring in the areas of exclusive control and 6 replace smoke detector batteries and notify the landlord of malfunctioning or inoperative smoke detectors A tenant does not have a right to withhold rent even if the landlord has failed to make promised repairs Military personnel can terminate a lease early without penalty if necessitated by official duties If rent is more than ve days late the landlord can only charge a maximum late fee of 15 or 5 whichever is greater this may only be imposed once per period Under the Tenant Security Deposit Act the landlord must hold the tenant s security deposit in a trust account The amount of a security deposit is limited to the equivalent of 1 two weeks rent if the lease is week to week 2 one and onehalf months rent if the lease is month to month or 3 two months rent if the lease term is greater than month to month After the termination of the lease the landlord must return the security deposit or account for its use within 30 days Also the law allows a landlord to charge a reasonable deposit for pets The security deposit may be used for nonpayment of rent damage to the premises nonfulfillment of the rental period unpaid bills that become a lien against the property e g utilities the costs of rerenting after a breach by the tenant and the costs of removal and storage of the tenant s property after summary ej ectment proceedings If the landlord fails to comply with the Tenant Security Deposit Act the tenant can sue for damages including attorney fees for willful noncompliance Tenants often sue under the North Carolina Unfair or Deceptive Trade Practices Act This Act is very broad and covers most businesses including rental businesses A prevailing tenant under this Act may recover treble damages ARE 306 I Unit 16 Water Law Types of water A E F Natural surface waters streams rivers ponds and lakes 1 Navigable waters to the mean high water mark and the lands under them are not subject to private ownership in North Carolina and most other states In general individuals can sh in the waters and use them for transportation but may not obstruct their use by others A landowner whose land touches the water is a riparian owner who may use the water under the doctrine of riparian rights to the extent that that use does not impede navigation 2 Nonnavigable waters are governed under the doctrine of riparian rights A riparian landowner is one whose land actually touches the water in question Under the English variation of the doctrine of riparian rights a riparian owner may make use of the water for domestic purposes but may not make a sensible alteration in its quality or unreasonably diminish its ow Whether the ow has been unreasonably diminished is a question of fact Interference with one s riparian rights is actionable as a tort usually based upon a nuisance theory North Carolina follows the reasonable use variant of the doctrine of riparian rights Diffuse surface waters Surface Waters not in Defined Channels At common law surface water was considered the common enemy and landowners could do as they wished with it without regard to its impact on other landowners North Carolina has modified this rule to a reasonable use rule Underground streams Subterranean waters in defined channels were treated under the common law in the same manner as surface streams Percolating groundwaters Subject to the rule of absolute ownership under the English rule In North Carolina percolating groundwaters are subject to the rule of reasonable use Springs Water in arti cial channels and ponds Natural surface waters A Riparian rights III 1 Natural ow theory 2 Reasonable use theory NC 3 Domestic natural uses 4 Arti cial uses 1 Stock watering Ii Irrigation Iii Hunting shing and swimming B Doctrine of prior appropriation Percolating Groundwater 1 Prior appropriation 2 Absolute ownership 3 Rule of reasonable use NC 4 Correlative rights rule 5 Statutory modi cations Boundaries A NaVigable and nonnaVigable waters B Accretions and avulsions C Erosion D Relictionsubmergence V Diffuse surface waters A Civillaw rule B Commonenemy rule C Rule of reasonable use NC VI Special districts ARE 306 UNIT 1 INTRODUCTION Introduce self and introduction by Department Head Pass out le cards email for internet students name major status fsjrsr economics courses completed contact information email address cell phone etc where is home for you career plans where do you want to live after you graduate would you live somewhere else Philosophy of class 1 Overview of laws affecting agriculture will not discuss them all 2 Sense of how pervasive law is locally nationally and internationally 3 Gain an appreciation for the economic impact of law and an understanding of the economic issues 4 Overview of the legal systema brief civics lecture 5 Develop an appreciation for the complexity and difficulty of enacting and enforcing laws 6 With this overall view recognize problem areas for farms and agribusinesses 7 Learn to spot issues 8 Learn to think logically about the law Question Review policy and schedule the syllabus The Final Project Unit 14 I ARE 306 Sales of Goods under the Uniform Commercial Code Applies to quotgoodsquot Goods means things including unborn animals and growing crops Goods must be existing and identi ed A contract for quotfuturequot goods operates as a contract to sell 11 III Statute of frauds 500 or more sufficiency of writing quantity and signature of party to be charged but not beyond quantity indicated Between merchants written con rmation to the party to be charged party to be charged has reason to know contents and fails to object within 10 days of receipt Completed transaction payment has been made and accepted or goods have been offered and accepted Specially manufactured goods not suitable for sale to another under circumstances that reasonably indicate that the goods are for the buyer Contract admitted to in pleadings or otherwise but not beyond quantity admitted to Merchant One regularly engaged in a particular business Farmers are merchants in NC One is a merchant only for the purposes of the business in which they are regularly engaged Remedies for breach Sellers Resell the goods in a commercially reasonable manner and sue for difference plus expenses Choose to not resell the goods and sue for the difference between the sale price and the market price at the time and place of tender plus expenses Volume seller remedy sue for lost profits Buyers Nondelivery or nonconforming goods Cover buy substitute goods and sue for the difference between the contract price and the cover price plus incidental expenses Nonconforming goods accepted notice given of nonconformity and suit brought for damages based upon breach of warranty Unit 9 ARE 306 Liability for Livestock and Other Animals and Dog Law Dog Law I Strict liability A For destruction of livestock or fowl off the dog owner s premises plus costs of suit B For damages caused by a dangerous dog anywhere C For damages caused by a dog running at large at night 11 Dogs which may be killed A Any dog believed to be mad rabid B Any dog which has killed humans sheep cattle hogs goats or poultry C Any dog running at large in a wildlife refuge sanctuary or management area by an agent or employee of the Wildlife Resources Commission D Any dog whose destruction is authorized by county or city ordinance 111 Criminal liability A Any owner who allows a bitch to run at large when it is in heat B Any owner who fails to kill a dog which has killed domestic livestock or a human and who allows the dog to roam at liberty C Failure by anyone to kill a dog believed to be mad D Leaving a dangerous dog unattended on the owner s real property unless it is kept indoors in an enclosed and locked pen E Transferring r 39 or 39 39p of a 39 dog to another without providing written notice to l the authority that determined the dog to be dangerous and 2 to the one taking possession or ownership of the dog IV Dangerous dog definition Any dog 1 which has killed or in icted severe injury on a person 2 any dog kept primarily for dog fighting or trained for dog fighting or 3 any dog determined to be dangerous by a county or municipal animal control officer or Board LIVESTOCK Misdemeanor to permit livestock to run at large GS 6816 Reasonable costs to any who impound and care for livestock found running at large Allowing domestic fowls to run at large is a misdemeanor Liability for trespassing livestock Liability for livestock on owner39s property Unit 5 Torts Products Liability ARE 306 Products Liability 0 Defective designmanufacture Strict liability or negligence 7 Strict liability not available in NC Products Liability continued 0 Express Warranties 7 Subject to negotiation 7 Interpretation Usage ofthe trade Course of dealing Products Liability continued 0 Implied warranty of merchantability 7 Must be expressly disclaimed 7 Generally acceptable to trade Products Liability continued 0 Implied warranty of fitness for a particular purpose 7 Communicated directly 7 Implied by circumstances Products Liability continued 0 Defenses 7 Privity of contract Extended to familyhouseholdguesm 7 Obvious defecw Products Liability continued 0 Standard 7 Negligence 7 Stn39ct liability Time 0 Statute of limitations ARE 306 Unit 5 TORTS 111 De nition A personal or civil wrong in icted upon one person by another for which the law allows redress Intentional torts A In icted with intent B Punitive damages available C Types not a complete list Trespass battery false imprisonment intentional in iction of emotional distress defamation libel or slander invasion of privacy false light D May also involve criminal prosecution NEGLIGENCE A Elements Duty Duty breached Proximate causation legal cause Damages to the plaintiff39s person or property B Defmition Negligence is the failure to act as a reasonable person would be expected to act under the same or similar circumstances C Common law defenses Contributory negligence Assumption of the risk Last clear chance modifies contributory negligence D Comparative fault or negligence E Burden of Proof VI VII preponderance of the evidence res ipsa loquitur Strict Liability A Liability without fault B Applied to ultrahazardous activities or abnormally dangerous activities Insurance A Intentional torts and crimes generally not covered B Only legal not moral obligations covered C Policies should be reviewed carefully Liability for Pesticide Application A Theories Strict Negligence Trespass DUTY TO PROTECT THOSE ENTERING AGRICULTURAL LAND A Trespassers duty slight may not maliciously injure may not use more force than necessary to eject may not use deadly force necessity B Licensees Nelson v Freeland abolished this category in NC De nition enter property for their own purpose but with permission eg social guests Duty to warn of dangerous conditions and animals and if a hunter other hunters C Invitee De nition On land with permission and for the purpose of the owner or tenant e g repair person hunter who shares game with the tenant or owner Duty to make the premises safe or warn of conditions which cannot be made safe D Special rules for children who trespass Unit 2 Sources of Law ARE 306 I Constitutions A Characteristics of sovereigns Federal Constitution created a government of limited powers State constitutions power limited only by the state constitution and explicit or implicit limits established by the US Constitution B Federalism Supremacy Clause Article VI of the US Constitution concurrent authority preeemption C Agricultural Law and the US Constitution Spending Clause Commerce Clause authority for much federal regulation of agriculture preemption dormant Commerce Clause Contract Clause states may not unreasonably impair contracts Fourth Amendment unreasonable searches and seizures prohibited Fifth and Fourteenth Amendment due process Fifth Amendment Takings Clause Equal Protection Clause Fourteenth Amendment II Treaty making power Article II section 2 of the US Constitution gives the President the authority to make Treaties with the Advice and Consent of the Senate two thirds vote absent the consent of Congress the states lack the power to make treaties with foreign nations or agreements with other states Article I Section 10 paragraph 3 III Legislative power Federal power to enact statutes vested in Congress subject to veto by the President that may be overridden by a two thirds vote of both houses North Carolina power to enact statutes vested in the General Assembly the Governor now has a limited veto IV Judicial power ower to decide cases vested in the US Supreme Court and inferior courts power to decide cases vested in the NC Supreme Court and inferior courts V Executive power President power to make treaties and issue executive orders Governor power to issue executive orders VI Administrative agencies Federal and state agencies both have the power to issue regulations VII County and municipal governments health boards power to issue ordinances and rules such as zone or nuisance ordinances VIII How to find laws A Legislation Federal United States Code USC United States Code Annotated USCA US Statutes at Large not codified State General Statutes of North Carolina County and municipal check with governmental unit Executive Orders Federal Title 3 of the Code of Federal Regulations State North Carolina Register Cases many reporters depending upon the specific court Regulations Federal Federal Register not codified Code of Federal Regulations CFR State North Carolina Register North Carolina Administrative Code Unit 7 Nuisance and Other Common Law Solutions to Environmental Issues 1 Right of Landowners to Lateral and Subjacent Support The owner of real property not only has the right to possess his land but he also has certain other specific rights For example he has the absolute right to have the land supported on the sides lateral and from beneath subjacent by adjoining property These rights exist whether or not there is negligence on the part of the adjoining landowner However the right to support only applies to land in its natural condition If the land is improved has structures on it there is no absolute right to support for the structures It then becomes a question of negligence 11 Air and Light The right to use all or a portion of the air space above real property is vested by the grant of the property eg fee simple or lease Common law also grants the right to have an unobstructed passage of light admitted to one s real property 111 Remedies in Tort A Trespass Trespass is de ned as the unlawful entry physical invasion onto the land of another This tort is based on the absolute right to exclusive possession of land including the surface the area below and the air above Trespass is an intentional tort that may be found even in the absence of damages This tort protects the landowner s right to possession B Nuisance Nuisance is defined as the unlawful and unreasonable interference with the enjoyment of the property of another in other words someone creates a condition that is obnoxious to his neighbor This tort protects the landowner s right to quiet enjoyment use of his property It is not necessary to have a physical invasion in order to establish the tort of nuisance Rather the disturbance is often noises or odors Nuisances may be of two types 1 public or 2 private A public nuisance is one that affects a large group of members of the public not necessarily their land An action to abate correct a public nuisance must be brought by a governmental agency and in addition to the civil suit the government could also bring criminal charges against the wrongdoer A public nuisance is not generally considered a tort A private nuisance involves a particular injury to a specific individual landowner In this case the suit against the wrongdoer may be brought by the affected individual If he can establish that his enjoyment of his property was significantly diminished he may recover monetary damages and or injunctive relief Private nuisances may be brought under any of the three tort theories strict liability intentional tort negligence that we studied Most nuisance suits are based upon a theory of intentional tort A nuisance may begin as a negligent act however once a neighboring landowner objects to the activity and the person creating the nuisance refuses to stop the activity becomes intentional Example Elvis is in his apartment playing his guitar Nate lives in the apartment next door and tells Elvis to stop Elvis refuses If Elvis music is a nuisance then the tort has become intentional A nuisance may be both public and private if a large group is affected and in addition some individuals are injured in unique ways This depends on the facts of the specific case and because of the difficulty involved in determining those facts courts and attorneys do not always distinguish between public and private nuisances There are several nuisance theories on which private nuisance claims can be based The first is strict liability If the activity of the wrongdoer or the conditions are abnormally dangerous he can be held strictly liable for resulting injuries even if he was not negligent A second nuisance theory is intentional interference with another s enjoyment This is the most frequently used basis for nuisance suits The intentional interference must also be considered to be unreasonable ie a the gravity of the harm outweighs the utility of the conduct or b the harm caused is serious and the cost to compensate for it makes the conduct not feasible A third nuisance theory is negligence where all of the elements must be present 1 existence of a duty 2 breach of that duty 3 causation in fact and proximate causation and 4 actual damages The courts have found different remedies for private nuisances based on the circumstances One remedy is an injunction the correction of the condition which is an appropriate remedy when the condition is one that can be changed This is also called abatement If the condition cannot be abated the plaintiff will seek monetary damages for the loss of his property value due to the permanent nature of the nuisance The court has the exibility to impose both remedies if it finds that to be appropriate for the particular circumstances In deciding whether to enjoin a nuisance or award monetary damages the court often balances hardships and benefits Once a nuisance is determined then the court must find an appropriate remedy The North Carolina Court of Appeals distinguished between the two balancing tests unreasonable interference and remedy by looking at the consequences of the defendant s actions versus the unreasonableness of the defendant s actions themselves Where the plaintiff is not without fault it is possible that the plaintiff may be forced to pay part or all of the cost of abating the nuisance IV Economic Impact of the Common Law Approach What the tort system seeks is to take extemalities created by one party and force that party to internalize those costs This is fair since we are forcing the individual who created the costs rather than a third party or society to bear those costs Unfortunately the tort system does this only imperfectly Transactions costs associated with the legal system are high so the legal system does a poor job of handling small but meritorious claims The tort system is also poorly equipped to handle injuries e g lowlevel chemical exposure with long lag times Proving causation is also a major problem because of the lag times and because it is often difficult to isolate the sources of some injuries For example we know that the Neuse River contains an excess of N However most of the sources are small and diffuse and it is therefore impossible to prove that any particular source caused any harm Nonetheless taking all the sources together the cumulative is enormous This is one reason that society has been forced to supplement the tort system with a system of regulation A second reason is that he tort system is only available once there is an actual injury Unlike the tort system a regulatory system can focus on prevention V RighttoFarm Laws One of the important factors in deciding a nuisance case is the nature of the area in which the activity is located In response to urban sprawl the encroachment of residential development on farmland and the increased nuisance lawsuits by the new urban dwellers against existing farms many states have enacted right to farm laws These statutes limit the circumstances under which a farm can be considered a nuisance by requiring the court to consider the change in conditions in the area surrounding the farm before declaring it a nuisance Essentially many righttofarm laws reverse the quotcoming to the nuisancequot rule that required courts to ignore which use came first in determining whether a nuisance exists the courts could always consider which use came first at the remedy stage of the trial The righttofarm statutes generally fall into four types 1 a time period is established after which the farm may not be considered a nuisance if it was not a nuisance when it began the most common type reverses the quotcoming to the nuisancequot rule 2 there is a presumption that the farm is not a nuisance 3 certain types of agricultural operations are excluded from nuisance suits or 4 certain types of claims are excluded e g private but not public nuisances North Carolina s righttofarm law is an example of the first type NCGS 106701a says that No agricultural or forestry operation shall be or become a nuisance public or private by any changed conditions in or about the locality thereof after the same has been in operation for more than a year when such operation was not a nuisance at the time the operation began provided that the provision of this subsection shall not apply whenever a nuisance results from the negligence or improper operation of any such agricultural or forestry operation The decision by the Iowa Supreme Court in Bormann has cast serious doubt on the constitutionality of some righttofarm laws Many right to farm laws in effect limit the riht of use and enjoyment of property by limiting the right to force the abatement of nuisances The Iowa Supreme Court held that the statute at issue in Bormann which is almost identical to the NC righttofarm law represented an uncompensated governmental taking of private property in violation of the 5th Amendment Unit 16 Water Law ARE 306 1 Types of Water A Natural surface waters B Diffused surface waters C Underground streams D Percolating groundwater E Springs F Water in arti cial channels and ponds 11 Natural Surface Waters The rights which owners and occupants of land adjoining a watercourse have to use that water are called riparian rights The humid Eastern states have traditionally followed the riparian doctrine of water rights Riparian rights attach to both surface and subterranean watercourses and to other de nite natural sources of water supply on the surface of the earth The nature of these rights is determined using the natural flow theory or the reasonable use theory Under the natural ow theory each riparian owner has a right to have the water of the stream remain substantially in its natural state free from any unreasonable diminution in quantity and pollution of quality Under the reasonable use theory each riparian owner has the right to make the maximum reasonable use of the water so long as it does not interfere with use by others The riparian owner may be allowed to take the whole ow of the stream if needed for domestic or natural uses leaving none for riparian owners downstream North Carolina follows the reasonable use theory Natural uses are those arising from the necessities of life such as household use drinking bathing irrigating small gardens or watering domestic animals The riparian owner may not take all of the water to the exclusion of the other downstream owners for artificial uses which are those uses that are not for domestic use Arti cial uses would include commercial stock watering irrigation and recreational use such as hunting shing and swimming The riparian landowner who raises stock on a commercial scale cannot exhaust the stream ow unless other riparian owners domestic needs have been met The right to irrigate applies only to the excess water available after domestic purposes and watering domestic animals are supplied Riparian owners have the right to hunt sh and swim in adjoining watercourses The arid Western states have adopted the doctrine of prior appropriation Under this theory the rst owner to divert water can use it all The water may be used anywhere as long as the use is bene cial and reasonable The earliest appropriation of water from a particular watercourse has a prior exclusive right to use the water appropriated over later appropriators rst in time rst in right III Percolating Groundwater Water found below the surface that is not in a clearly de ned underground watercourse is called percolating groundwater States have varying options regarding the right to use this water 1 prior appropriation discussed above 2 absolute ownership the owner of overlying lands is the absolute owner of all percolating waters thereunder owners may withdraw as much as they desire without regard to reasonableness or the effect on others 3 rule of reasonable use water use by a landowner is limited to the amount necessary for some reasonable bene cial purpose in connection with his land this is the rule adopted in North Carolina 4 correlative right rule when there is insufficient groundwater from a common source to meet all the needs for use on overlying land the supply is divided among competing users in proportion to the ownership of the overlying land and 5 statutory modifications based on the Restatement 2nd of Torts and other state law IV Boundaries Navigable water is water that is suitable for commercial navigation the transportation of goods and non navigable water is not Title to land under navigable streams or natural lakes is held by the state as public trust land The state may lease but never sell public trust land Title to land under nonnavigable water is held by the owner of the abutting land and extends to the center of the main channel of the stream unless he owns property on both sides and then the streambed is the exclusive property of the landowner A riparian owner who owns both sides of a non navigable water may maintain a trespass action against anyone using the water The boundary line along a stream may change as the stream itself changes This depends on whether the change is by accretion or avulsion Accretion is the slow addition of land to the banks caused by the washing action of the body of water and ordinarily belongs to the adjoining landowner Avulsion is the sudden loss or addition of land by the actions of the water and does not change the boundary from its original place Erosion is the slow wearing away of land by water that results in a change in the boundary Reliction is the gradual lowering of the water level in a natural lake resulting in the addition of land to the landowner Submergence is the opposite of Reliction and involves the gradual and permanent inundation of land that was once dry Arti cial lakes are not governed by these rules Arti cial lakes are generally governed under the law that was used to create them This may be federal law if the lake was created by the US Army Corps of Engineers or it may be state law if the lake was created by an entity governed by state law V Diffuse Surface Waters Diffuse surface waters runoff may originate from any natural source They are shortlived and are spread over the ground but not yet concentrated enough to form a channel ow or a lake Landowners may want to use these waters or they may want to get rid of them eg drainage or obstruction The courts follow various rules when deciding cases related to getting rid of diffused surface water 1 civillaw rule 2 commonenemy rule or 3 rule of reasonable use the one adopted by North Carolina courts VI Special Districts The legislatures of many states have created special districts to deal with water such as levee and drainage districts and soil and water conservation districts These districts generally can acquire easements by condemnation and can construct and maintain drainage systems The costs are borne proportionally by the affected landowners VII Capacity Use Areas North Carolina now has two capacity use areas where large withdrawals of groundwater are restricted Unit 6 Contracts ARE 306 I De nition a voluntary agreement between two or more parties enforceable in court II Elements A Competent parties B Proper subject matter C Offer D Acceptance E ConsiderationDetriment exchange of value III Types of contracts A Express bilateral B Express unilateral C Implied Quasicontract l Implied in fact 2 Implied by law restitution unjust enrichment IV Statute of Frauds A Enacted 1677 by English Parliament B Requires that a contract be in writing to be enforceable C Current NC requirements Sale of goods for 500 or more Promise to pay debts of another Promise made in exchange for marriage VI VII Promise that cannot be performed within 1 year from the date of the promise Land sales Leases that exceed 3 years from the date of making Others Exceptions to the writing requirement A Partial performance B Promissory estoppel Parol eVidence rule A Prior or contemporaneous oral statements B Ambiguous terms C Subsequent oral statements unless integration clause Remedies for breach A Money damages B Speci c performance C Negative injunction employment contracts D Rescission and restitution VIII Defenses A Impossibility B Impractibility C Mistake Stipulated or liquidated damages A Penalties not allowed B Reasonable related to actual damages Time A Statute of limitations Damages actions at law B Laches Injunctive relief actions at equity Unit 4 Administrative Agencies 1 De nition Created by Congress to carry out speci c duties II Duties A Rule making B Adjudication of individual cases C Administrative activities 111 Rule making governed by the Administrative Procedure Act A Informal 1 Review of Proposed Rule by OMB 2 Notice of Proposed Rule published in the Federal Register 3 Written comments received and evaluated 4 Review of draft Final Rule by OMB 5 Final Rule published in the Federal Register B Formal not favored 1 Review of Proposed Rule by OMB 2 Notice of Proposed Rule published in Federal Register 3 Public hearings witnesses sworn and subject to cross examination 4 Review of draft Final Rule by OMB 5 Final Rule published in Federal Register C Hybrid 1 Review of Proposed Rule by OMB 2 Notice of Proposed Rule published in Federal Register VI VII 4 5 3 Written comments received and informal public hearings held Review of draft Final Rule by OMB Final Rule published in Federal Register D Exempted rule making not favored by the courts 1 2 4 MilitaryNational Security speed and secrecy needed Emergencies Interpretive General policy statement Judicial review of rule making A Delegation unconstitutionally vague B Constitutional standard violated C Beyond scope of statutory authority D Proper procedure not followed Agency adjudication Administrative duties A Advising B Conducting research C Issuing permits D Managing property E Administering contracts and grants Limitations on agency power A Statutory B Institutional 1 Executive a Presidential appointment of agency heads b OMB budget recommendations for each scal year c OMB regulatory review process d Executive orders C Legislative l Oversight 2 Power to terminate or amend enabling statute 3 Power of appropriations budget 4 Advise and consent on nominations by the Senate D Judiciary All agency action subject to judicial review VIII Types of agencies A Executive head serves at the pleasure of the President B Independent Head appointed by the President but serves for xed term C EPA is an independent agency created by executive order but its head serves at the pleasure of the President Environmental Protection Agency EPA Department of the Interior Bureau of Land Management US Fish and Wildlife Service National Park Service Department of Agriculture Forest Service Natural Resources Conservation Service Farm Service Agency Department of Labor Occupational Safety and Health Administration Mine Safety and Health Administration Independent Agencies Consumer Products Safety Commission Food and Drug Administration Department of Defense US Army Corps of Engineers


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