February 1996 - Vermont Bar Examination Essay Questions - Model Answers

[Model Answer - Question I]
[Model Answer - Question II]
[Model Answer - Question III]
[Model Answer - Question IV]
[Model Answer - Question V]
[Model Answer - Question VI]

Examination Essay Questions - February 1996
MODEL ANSWER - QUESTION I - FEBRUARY 1996

                                    
       Question Number 1: As Jesse's attorney, I would make a number of
  challenges to the detention, questioning and arrest of my client. First, I
  would file a motion to suppress all of the evidence gathered by the police
  following their illegal stop of Jesse. I would argue that the approach and
  questioning of Jesse at the campfire site constituted a detention, and that
  the police did not have a reasonable suspicion to believe that my client
  had been involved m the burglary of the residence in question. The police
  did not have articulable facts to believe that Jesse was involved. The only
  description that the police received from Mrs. Smith was that she had seen
  a young male leaving the house; she did not give a description as to
  height, weight, hair color or length, etc. Therefore, there was no reason
  to believe that Jesse had been the young man that Mrs. Smith had seen. In
  addition, the campfire site is one-half mile from the house that was
  entered, and there was no information to indicate that the young male had
  gone off in the direction of the campfire, rather than into some other
  building or residence. If the initial detention of Jesse was illegal, then
  any evidence seized from him as a result of that stop would be inadmissible
  under the "fruits of the poisonous tree" doctrine. On this basis, the
  jewelry seized both from the beer can and from the search of Jesse's
  person, as well as the statements made by Sam, would be inadmissible.

       I would also file a motion to suppress the statement that Sam made to
  the police. Sam was being held in custody when he was questioned by the
  police, because he was not free to leave. He was separated from Jesse and
  taken away. The police did not advise him of his Fifth Amendment right to
  remain silent, in the form of a Miranda warning. Since Sarn was not advised
  of his rights, he could not have waived his right to remain silent. In
  addition, pursuant to Vermont case law, Sam was a minor and should have
  been given the opportunity to consult with a disinterested adult prior to
  waiving his right to remain silent and to counsel. As a minor, he is deemed
  incapable of knowingly and voluntarily waiving those constitutional rights.
  In this instance, the police did not make him aware of this right, nor did
  they give him the opportunity to consult with an adult. For all these
  reasons, the statements made by Sam were taken in violation of his
  constitutional rights, were not given voluntarily, and should be
  suppressed. Sam also was not advised of his Vermont statutory right to have
  a public defender appointed for him.

       I would also move to suppress the earrings that Sam produced to the
  police. As indicated in the prior paragraph, these earrings were seized
  during the illegal interrogation of Smith. The seizure of the gold earrings
  was a direct product of the questioning of this minor. Under the "fruits of
  the poisonous tree" doctrine, the earrings must be suppressed.

       Fourth, I would move to suppress the jewelry that the police
  discovered in the beer can. I would argue that my client had had a
  reasonable expectation of privacy in the beer can, since he was clearly
  using the campfire site area, and all of the beer cans were within his
  reach. The examination of the can, therefore, constituted a search. This
  search did not fall within any of the recognized exceptions to the
  requirement for a search warrant. The search of the empty beer can, without
  a warrant, violated the Fourth Amendment to the US Constitution and Jesse's
  Vermont constitutional rights. The police officer did have time to obtain a
  search warrant, but failed to do so. The items found in the can should be
  suppressed.

       Finally, the jewelry that was seized from the search of Jesse was
  illegally obtained in violation of the Fourth Amendment and the Vermont
  Constitution. Although the police have the right to pat down or frisk a
  suspect, under Terry vs Ohio, the scope of the pat down is limited to a
search for weapons. In addition, the police must have a reason to believe
that the suspect is armed and dangerous. In this case, there was no
evidence that Jesse was carrying weapons, or that he was a danger to the
police. In addition, the jewelry in Jesse's pants pocket could not have
felt like a gun, switchblade, or other weapon. Therefore, the police
exceeded the scope of the frisk, and the seizure of the jewelry was an
illegal search and seizure. Jesse also had not been placed under arrest, so
the police could not justify this as a search incident to arrest.

Lastly, if all of the jewelry seized and the statements made by Sam
are suppressed, the prosecution has no evidence to support its burglary
charge against Jesse. I would file a motion to dismiss for lack of a prima
facie case.

Question Number 2: As prosecutor for the State, I would respond to the
motions made by Jesse's counsel as follows. First, the approach of Jesse
and Sam at the campfire site did not constitute a stop. The two boys were
already at the site, and the police merely approached thern to ask some
questions. The police have the right to ask a person to identify himself,
and provide some basic information. Even if the police had not suspected
that the boys were involved in the burglary, they had the right to approach
and question the boys given the lateness of the night hour, the presence of
alcohol, and Sam's age. I would maintain that the police conduct did not
amount to a detention. In the alternative, if the court felt that the
police conduct did amount to a stop, I would argue that the possession of
alcoholic beverages was a misdemeanor that allowed the police to approach
and question the two boys involved.

With respect to the motion to suppress Sam's statement to the police,
I would respond that Jesse does not have standing to challenge the use of
the statements. Jesse's constitutional rights were not violated, and he
cannot raise the violation of a co-defendant's rights in his stead. Since
Jesse cannot challenge the admissions made by Sam, the evidence seized from
Sam also is admissible against Jesse.

With respect to the seizure of the jewelry from the beer can, I would
argue that Jesse did not have a reasonable expectation of privacy in this
particular item. The empty can was lying on the ground, and had been
discarded. It could just as well have been a beer can left by a previous
visitor to the site. There was nothing to indicate that the abandoned item
belonged to Jesse. In addition, the evidence was inadvertently discovered
by the police. One of the exceptions to the Fourth Amendment requirement
for a search warrant is for evidence that is in plain view. As long as the
police have a reasonable basis for being in the area, any evidence of a
crime that is in plain view may be seized. The police officer in this case
accidentally struck the can with his foot, and heard a suspicious sound
from within the can. Given the fact that the police were investigating a
burglary, and that they had already learned from Sam that jewelry had been
taken from the victim's house, it was reasonable for the police to pick up
and inspect the can after having heard the unusual noise.

The pat down of Jesse was appropriate as a frisk. The police already
had more than enough evidence to believe that Jesse had been involved in
the burglary of the residence, and they were entitled to frisk him as a
precaution for the officers' safety. When they felt something hard in
Jesse's Pants pocket, it was reasonable for them to investigate further to
make sure that Jesse was not carrying a weapon. A switchblade or pocket
knife can be rather small, and still pose a threat to the police.

Finally, if a motion to dismiss is made by Jesse's attorney, as
prosecutor I would argue that there is enough evidence to sustain a finding
of probable cause against Jesse. At a minimum, Sam's oral statements and
the physical evidence that he produced are enough to support the charge
against Jesse. The defense motion would have to fail.

Question Number 3: The Court will most likely deny Jesse's motion to
suppress based on the initial stop. It was reasonable for the police to
question the boys, given the nearness of the campsite to the house
burglarized. The police were also perfectly justified in approaching two
teenagers who were at a campfire site in the woods alone in the evening in
the possession of alcoholic beverages. Since a misdemeanor was being
committed in their presence, they could not only detain the suspects, but
they could also have placed the two boys under arrest at that point.

The motion to suppress Sam's statements, and the evidence seized from
him, will be denied by the Court. The prosecution is correct in asserting
that Jesse does not have standing to claim any violation of Sam's
constitutional rights.

The Court will also probably deny the motion to suppress the jewelry
seized from the beer can. There was no reason to believe that Jesse had a
reasonable expectation of privacy in an empty beer can, which was lying on
the ground. In addition the police officer's discovery of the jewelry was
inadvertent, and there was not time to obtain a search warrant because of
the potential loss or destruction of evidence at the campsite.

The Court will probably grant the suppression of the jewelry seized
from Jesse's pants pocket. The jewelry would not have felt like any
dangerous weapons, and the police did exceed the scope of the frisk by
putting their hands into Jesse's pocket under these circumstances. Jesse
was not yet under arrest, and there was nothing to indicate he was carrying
weapons.

With respect to the motion to dismiss for lack of prima facie case,
that motion would be denied. The prosecution has enough evidence,
particularly with Sam's admission, and the jewelry that he produced to, to
proceed to trial against Sam.

MODEL ANSWER - QUESTION II - FEBRUARY 1996 I. Since three witnesses are required to a will, the will is invalid. 14 V.S.A. § 5. JH will not be appointed executor under the will as a result of the invalidity of the will. He might be appointed as administrator. 2. The home passes outside of probate to the surviving spouse since it is owned as tenants by the entirety. JH will not get any interest in the home. 3. The federal government will impose an estate tax. The exact amount cannot be computed on the facts given, but since more than the $192,800 credit would be required to offset the tax on the transfer here, a tax will be imposed. There may also be discussion here in which some takers of the exam answer with reference to a $600,000 exemption amount which is the credit equivalent. Either answer is acceptable. The estate tax is not imposed on monies or property given directly to the spouse; however, if the amount passing to non-spouses is in excess of $600,000, as here, the tax will be imposed. 4. The fact that the parties separated is irrelevant. Thayer v. Thayer, 14 Vt. 107 (1842). The property will go by rules of intestacy since the will is invalid. In addition, to the house which is received outside of probate, the stepmother will receive one-third of the cash ($1,666,666), plus one-third of the real estate, for a total of $2 million. JH will get the remaining amount or $3,333,333, plus two-thirds of the real estate. 12 V.S.A. §§ 401, 461. If dad's widow had been JH's mother or had adopted him, she would be entitled to one-half of the real estate rather than one-third. Expenses of administration, taxes and funeral expenses are ignored in arriving at the above number. 5. A spendthrift trust could be established which limits the beneficiary's ability to spend or assign the money and makes the fund unreachable by the beneficiary's creditors. The trust could be either inter vivos or testamentary, but it, in essence, would permit a trustee to give such monies to the beneficiary as the trustee deemed advisahle, or as required by the terms of the document, but preclude the beneficiary from anticipating income or acquiring principal. 6. A trust can be established. Although the question is directed toward the establishment of a testamentary trust which permits the trustee to "take care of mom during her life," the trust could also be an inter vivos trust which names JH as trustee during the term of his life and names a successor trustee upon his death. In either case, JH could designate who is to receive the remainder, if any, after mom's life estate terminates. 7. Such a list would not be binding. JH should prepare a codicil when he wants to change the disposition of the personal property rather than writing a letter to his executor or leaving a list. 8. JH can name someone else to act as executor, but he cannot cut Mrs. JH out of the estate entirely since she could elect to take against the will and receive one-third of the personally, 14 V.S.A. §§ 401 and 402, and one-half of the real property if the "only child" is his and his wife's; otherwise she would get one-third of the realty, § 461. While there are some provisions that would limit her ability to elect against the will, none of the facts necessary to accomplish that, i.e., the presence of a premarital agreement, are present in the facts given. 14 V.S.A. §465. 9. JH will be required to file a gift tax return if he alone gives the friend $18,000. If he and his wife, however, could each give a portion of that amount, and so long as neither gave a portion in excess of $10,000 annually, no return would be necessary. JH would not have to pay tax on the $18,000 gift up until such time as his $192,800 unified credit was used up. But, to the extent that he utilizes the credit during his life, there wild be less of a credit available to his estate at the time of his death. JH could also avoid paying tax or utilizing part of the credit by having his wife sign the consent to gift splitting on the tax return. 10. For a resident of Vermont, venue lies in the district where the decedent resided at the time of his death. 4 V.S.A. §311a, 312. A change of venue may be sought under V.R.P.P. 38, but the facts as stated would not seem to warrant such a change. MODEL ANSWER - QUESTION III - FEBRUARY 1996 1. First Witness A. Beliefs Defense counsel could attempt to expose the first witness's strange beliefs, expecting that, upon learning of these views, a jury would tend to doubt the witness's credibility. Given the nature of the views in question (relating to creation and the existence and nature of a supreme being), counsel would expect to meet an objection based on VRE 610 which prohibits the admission of evidence of the beliefs or opinions of a witness on matters of religion for the purpose of showing that, by reason of their nature, the witness's credibility is impaired or enhanced. B. Bias While VRE 610 forecloses inquiry into the religious beliefs or opinions of a witness for the purpose of showing that the witness's credibility is affected by their nature, an inquiry for the purpose of showing interest or bias because of them is not within the prohibition. Thus, disclosure of affiliation with a church which is a party to certain litigation would be allowable under the rule. Similarly, defense counsel in this matter would likely be permitted to show public disagreement between the defendant and the first witness on beliefs about the origin of the world in order to show that the witness may carry a bias against the defendent. C. Criminal Conviction Counsel would seek to attack the first witness's credibility based on the witness's criminal conviction. VRE 609(a)(2) would allow admission of the criminal conviction since it was punishable by imprisonment in excess of one year under California law, whether or not it involved untruthfulness or falsification. In addition, the conviction occurred within the last 15 years, the time limit set by VRE 609(b). To be admissible under VRE 609(a)(2), the Court would have to determine that the probative value of the conviction evidence substantially outweighs its prejudicial effect and, if the witness were a juvenile at the time of the adjudication, that admission in evidence is necessary for fair determination of the issue of guilt or innocence. VRE 609(d). 2. Police Officer's Testimony The police officer's testimony will likely be admitted in part and excluded in part. A. Present Sense Impression/Excited Utterance That portion of the officer's testimony which relates to the cook's statement to the effect that she saw Jack carrying away the tarts would likely be considered an excited utterance or a present sense impression under VRE 803(1) and (2), since the cook made the statement "right after the theft," and what the cook saw would easily be considered a startling event. B. Admission That part of the cook's statement repeating the defendant's alleged admission that he stole the tarts will likely be excluded from evidence. The statement itself is an admission and therefore is not hearsay under VRE 801(d)(2). The cook's repetition of the statement is hearsay, however, and is not likely to be considered a present sense impression or excited utterance since, for example, it does not describe or explain an 'event or condition" under VRE 808(1) or (2). In light of an accused's right to silence and right to confront in a criminal case, one would expect a court to be especially reluctant to admit such hearsay into evidence. 3. Third Witness A. Deposition Testimony At least some of the post deposition statements of the third witness -- that "she had not really seen Jack do anything," and that she was "forty feet tall," -- are inconsistent with her trial deposition testimony. Like a prior inconsistent statement, these statements should be admissible to impeach her credibihty. The problem is how to put these inconsistent statements in evidence. If a lawyer is called as a witness on behalf of his or her client, the lawyer is ordinarily required to withdraw from representation. DR 5-102. There is an exception where the lawyer's withdrawal would work a substantial hardship on the client due to the distinctive value of the lawyer or firm as counsel in a particular case. Id., DR 5-101 (B)(4). This problem might be avoided by calling the law clerk to testify, if the Court decides that the law clerk ought not be treated like a lawyer in the circumstances. The underlying concern of the ethical rules seems to be that by testifying a lawyer may harm his or her client's interests by directly placing the lawyer's credibility in issue. This concern would be reduced as to a law clerk who would not ordinarily present himself as the client's representative before the jury. B. Nurse Unless the privilege has been waived in some way, the nurse would probably be successful in asserting the patient's privilege under VRE 508 on behalf of the young woman. The privilege extends to a mental health professional, who can be a nurse, with professional traimng, experience and demonstrated competence in the treatment of mental illness. The privilege would also extend to a person "reasonably believed by the patient" to be a mental health professional. The expiration of the nurse's incense and his refusal to pay the licensing fee should not affect assertion of the privilege. C. Hearing Transcripts VRE 503(d)(1) states that there is no patient's privilege in proceedings under that part of Title 18 of the Vermont Statutes Annotated on mental health for any communications to or from a mental health professional while the professional is attending the patient. Assuming that the state has sought to impose a non-hospitalization program of treatment on the young woman under these statutes, communications presented in the transcripts would not be considered privileged and could be uxed to, for example, challenge the witness's credibility. MODEL ANSWER - QUESTION IV - FEBRUARY 1996 Advice to Susan Smith: Attorney Jones must advise Ms. Smith regarding the following issues: 1. Are the impact fees imposed by the town upon all commercial developers valid? 2. Is the by-law imposing the "park fee" or requiring the set-aside of a permanent "green space" for public use valid? First it should be noted that the Town's authority to enact zoning regulations (delegated to them by the legislature) is an exercise of "police power." Zoning and land use restrictions are intended to promote public health and safety, and for the benefit of the community as a whole. It is presumed that all zoning regulations are constitutional, and they will generally be struck down only if they are unreasonable or arbitrary, or bear no substantial relationship to public health, safety or general welfare. In order for any law to be a valid exercise of police power, it must serve a legitimate governmental purpose, and there must be a reasonable relation between the end sought and the means used to achieve that end. In addition, property owners are protected by the due process provisions of the constitution from the taking of their property by the State without just compensation. A reasonable regulation adopted pursuant to police power to protect the public welfare will not effect an unconstitutional taking. An ordinance will effect such a taking or "inverse condemnation" only if it deprives a landowner of the entire use of its land, or substantially deprives him of the use of his land. In the event that a regulation is found to have that effect, the State must provide just compensation to the landowners affected by it. Also, a Town cannot discriminate unfairly against particular areas of land, and must apply its regulations fairly and evenhandedly to avoid violating landowners' rights to equal protection of the laws. 1. Impact fees. Valid Exercise of Police Power? In general, the imposition of impact fees and the like (posting of bonds, etc.) has been upheld, at least in the context of subdivision regulation. There must be specific legislative authority to enact such fees. In order for such fees to be valid they must be directly related to costs created by the new development. The regulation in this case is clearly and narrowly defined enough to withstand any challenge. Taking without just compensation? The imposition of impact fees is not a taking, so there is no issue of this kind here. Equal protection violation? These fees are imposed only on commercial developers, not on residential developers. This discrimination would probably pass muster, however. As commercial development creates different pressures upon the infrastructure of the community regarding traffic, water use, law enforcement and fire services than a residential development does, there is a rational basis for this different treatment of commercial developers. So, attorney Jones should advise that there is probably no basis for a constitutional challenge tO these fees 2. "Park fee" or "green space" set-aside. Valid Exercise of Police Power? It appears that the purpose of this requirement is that the Town ensures that a minimum amount of Town land is reserved for the use of the general public for parks and recreation. This is a legitimate government purpose. The means chosen to achieve this goal, to require shoreline developers of over 5 acres to pay a park fee, or to set aside, or "dedicate" a portion of their land for public use, could probably have been focused more narrowly to achieve the stated goal, but would probably be upheld as "reasonably related" to the goal. Taking without just compensation? There is case law that goes both ways on this issue as to the "dedication" issue in particular. Obviously, the landowner will lose one hundred percent of the use of 10% of its land if it chooses dedication rather than payment of the "park fee". This could be viewed as a taking, at least as to that 10%. A recent U.S.Supreme Court
decision on an appeal from Oregon held that the city in that case had not
tailored its statutes mirrowly enough, and struck down the application of
the statute to a landowner who had been compelled to construct a bike path
through her commercial property when she expanded her business. The fact
that in this case there are two options, one requiring payment of a fee,
and the other requiring setting aside land for public use, makes it more
likely that the scheme would pass muster, and would not be viewed as an
unconstitutional taking. Dedication schemes like this one have often been
upheld in the context of large subdivisions.

Equal protection? The only "discrimination" in this regulatory scheme
is the application of this requirement only to shoreline development. There
is a legitimate purpose for this different treatment, therefore, no equal
protection violation is likely to be found.

So again, Attorney Jones should advise his client that there is
probably not legitimate constitutional challenge to this regulatory scheme
either.

Advice to Sam Tree:

Sam has asked for advice about several issues:

1. Constitutional challenges to disorderly conduct charge.
2. Constitutional challenges to conditions of release.
3. Resumption of picketing and protests at Giantmart headquarters.

The answer to all of these questions is based upon Sam's first
amendment rights to free speech and assembly. These are fundamental rights,
and Sam's and his associates protests Giantmart headquarters are a classic
exercise of these rights.

1. Disorderly conduct charge.

Sam's disorderly conduct charge is apparently based upon his having
called Officer Buttons a "corporate flunky," screaming and yelling, and
attracting a crowd, at Giantmart Headquarters. Although he may also have
tramped bushes, that would result in a property destruction charge, not
disorderly conduct. The Vermont disorderly conduct statute has been upheld
as not unconstitutionally vague. The question then, is whether, as applied
to Sam's conduct here, the criminal charge unconstitutionally abridges his
right of free speech.

Some kinds of speech are not protected by the first amendment,
notably: obscenity, speech which incites the public to imminent violent
acts and which is likely to result in such acts (also known as "fighting
words"), fraudulent speech, deliberately false speech. The only category
into which Sam's speech arguably falls is that of "fighting words."
Fighting words are those that by their very utterance cause injury or tend
to cause in immediate breach of the peace. Arguments could be made that in
this context, where Sam was drawing a crowd, was screaming loudly, and was
confronting an officer of the law with insults, his speech did constitute
"fighting words." However, an argument could be made that the use of the
phrase "corporate flunky" is relatively inoffensive, and cannot be viewed
as "fighting words.'

Jones should advise Sam that a challenge can be made to the
constitutionality of the charge against him, but the outcome of that
challenge is uncertain.

2. Conditions of release.

The conditions which the Court has imposed upon Sam include: remaining
a certain distance away from Giantmart, and not doing any picketing or
leafletting of Giantmart anywhere. The conditions both infringe upon Sam's
right to assembly and speech. The question again, is whether these
restrictions are valid under the first amendment. The government may impose
"reasonable time, place and manner" restrictions upon our rights of speech
and assembly. Are these restrictions reasonable? In light of the nature of
the charges against Sam, and the fact that the conditions on Sam's release
are by necessity time limited (to the period during which the charges are
pending against him), the 100 feet away from Giantmart HQ seems likely to
be upheld as reasonable. However, the restrictions on any leafletting or
picketing whatever regarding Giantmart is overbroad, and may be challenged.

Jones should advise Sam that a challenge to the 100 feet away from
Giantmart requirement is unlikely to succeed, but that a challenge to the
restriction on all leafletting and picketing is more promising.

3. Resumption of picketing.

In light of the above answers, Sam should abide by the existing court
orders until a successful challenge to their restrictions has been made on
his behalf.

Advice to Susan Smith:

Ms. Smith wants advice regarding obtaining injunctive relief against
Sam & Company. Again, the answer to this question is governed by first
amendment law. Injunctive relief is difficult to obtain in any case; it is
an extraordinary remedy. The person seeking it must demonstrate that they
have no adequate remedy at law. The Court cannot use an injunction to
prevent anyone from exercising legitimate first amendment rights to free
speech and assembly. Reasonable time, place and manner restrictions may be
imposed, as discussed above. The same categories of speech described above
are not protected, and may be enjoined. Simply chanting, talking, handing
out leaflets, carrying signs, and the like, are all protected by the first
amendment. The best that Susan can hope for from an injunction is a
restriction against any trespassing on Giantmart's private property, any
further destruction of its private property (bushes, etc.), and a
restriction on picketers physically obstructing people from entering or
leaving the building. Any more restrictive injunctive relief would unduly
interfere with the first amendment rights of the picketers.

Jones should advise Smith that she may succeed in obtaining injunctive
relief, but the injunction will not prohibit the picketing, merely restrict
it somewhat.

MODEL ANSWER - QUESTION V - FEBRUARY 1996 I. Respective Claims of Competent Contractors, Inc. and The Homeowners A valid oral contract existed between the Homeowners and Competent. Although an agreement that cannot be performed within one (1) year from its making falls under the statute of frauds (12 V.S.A. §181) and requires a writing, this contract could be performed in less than a year and thus could not be defeated with a statute of frauds defense. Bonfanti v. Avers, 134 Vt. 421 (1976); Fricon v. Whipple. 134 Vt. 376 (1976). The verbal agreement to arbitrate is not enforceable because it does not meet the requirements of the Vermont Arbitration Act. 12 V.S.A. §§5651 et seq. Under the Arbitration Act, no agreement to arbitrate is enforceable unless accompanied by or containing a written acknowledgment of arbitration signed by each of the parties or their representatives. And, when the acknowledgment is contained in the same document as the agreement to arbitrate, the acknowledgment must be displayed prominently. 12 V.S.A. §5652(b). Because the problems with the roof, foundation and window appear to be substantial, the Homeowners have a good argument that Competent's work was so deficient that it constituted a material breach of the contract. An insubstantial or trivial breach would not justify termination of the contract, but a material breach would. Unlike contracts governed by Article 2 of the UCC (Sale of Goods), Competent did not have a right to cure material breaches. As long as the breach was material, the Homeowners had the right to terminate the contract immediately, without giving Competent an opportunity to "cure." Although it appears that the Homeowners did have grounds to terminate the contract, their actions subsequent to Competent's breaches raise waiver, estoppel, contract modification, and detrimental reliance issues. Competent could plausibly argue that Harry Homeowner's statement after the breaches were discovered, in conjunction with the actions taken by Competent in reliance upon those statements' estopped the Homeowners from terminating the contract until Competent had a reasonable opportunity to fix the problems. In every contract, there is an implied covenant of good faith and fair dealing. Carmichael v. Adirondack Bottled Gas Corporation of Vermont, 161 Vt. 200 (1993). Regardless of broad unilateral termination powers, the party who terminates a contract commits an actionable wrong if the manner of termination is contrary to equity and good conscience. Id. The implied covenant of good faith and fair dealing exists to ensure that parties to a contract act with "faithfulness to an agreed common purpose and consistency with the justified expectations of the other party." Restatement (Second) of Contracts §205, comment a (1981). Thus, bad faith may inhere in "harassing demands for assurances of performance, rejection of performance for unstated reasons, wilful failure to mitigate damages, and abuse of a power to determine compliance or to terminate the contract." Id. §205 comment e. On balance, under the facts presented, the Homeowners probably had a right to terminate the contract because of Competent's material breaches, and the Homeowners probably did not violate the implied covenant of good faith and fair dealing. Harry Homeowner gave Competent two days to fix the problems, and there is no evidence in the fact pattern that the problems were in fact fixed within the two days. The facts only establish that Competent had taken steps to have experts "examine" the problems. Harry Homeowner did not actually terminate the contract until the third day, which was beyond the two day period that he expressly gave Competent to fix the problems. Competent could argue that Harry's statements after the breaches were discovered, in conjunction with Competent's actions to fix the problems, constituted either a modification of the original contract, or a separate unilateral contract. On balance, however, these arguments will most likely
fail.

If in fact a portion of the addition was built on the neighbor's
property as a result of Competent's error in misreacling the specifications
and survey, then the Homeowners have a breach of contract claim against
Competent on that basis. The erroneous siting of the addition is further
evidence that Competent was not in fact competent to perform the work
called for under the contract, and woul,d be further evidence that the
aggregate of shoddy work performed by Competent equated with a material
breach of the construction contract. In addition, if Nasty Neighbor brings
a claim against the Homeowners for the erroneous siting of the addition,
the Homeowners would probably have a valid indemnification claim against
Competent. See Bardwell Motor Inn v. Accavallo, 135 Vt. 571 (1977).

Assuming the Homeowners validly terminated the contract, they would
have a right to hire another contractor to correct the problems and finish
the addition in accordance with the original contract. The damages that the
Homeowners could recover from Competent would be the additional cost, over
and above the original contract price of $50,000, to correct the problems
and finish the addition. Any related incidental or consequential damages
would be recoverable as well.

If the factfinder were to determine that the Homeowners were premature
in terminating the contract, or that the Horrreowners should be estopped
from terminating the contract at the point they did, or that the Homeowners
terminated the contract in bad faith in breach of the implied covenant of
good faith and fair dealing, then Competent would be entitled to its
"benefit of the bargain" or "expectation" damages.

The facts do not indicate that the architect's plans were faulty, or
that the architect was otherwise the cause of the erroneous siting of the
addition. However, if the architect's plans were defective and the cause of
the erroneous siting of the addition, then the Homeowners and Competent
would probably have a valid breach of contract claim against the architect.
Although no privily of contract existed between the architect and
Competent, it was obviously the intent of the parties that Competent rely
on the plans provided.

It is unclear from the facts why the large custom ordered bay window
did not fit. It may not have fit either because the window was improperly
designed or constructed, or because Competent did not properly construct
the framing surrounding the area where the window was to fit. If the window
did not fit because it was defective, as opposed to improper construction
by Competent, it is likely that Competent could recover the cost of the
window from Magic Mirror & Glass Specialists. Unless properly excluded or
modified, a warranty that goods shall be merchantable is implied in a
contract for their sale if the seller is a merchant with respect to goods
of that kind. 9A V.S.A. §2-314. Here, Magic Mirror was clearly a "merchant"
with respect to the window. Under §2-314, to be "merchantable," goods must
be fit for the ordinary purpose for which they are normally used. If the
window was defective and as a result could not fit into the house, then the
implied warranty of merchantability would have been breached.

Magic Mirror's attempt to avoid liability by reason of the "as is" and
"without any warranties" language in the invoice, will likely be
unsuccessful. To exclude or modify the implied warranty of merchantability,
the language must mention i'merchantability," and in the case of a writing,
must be conspicuous. The language in Magic Mirror's sales invoice failed to
include the necessary language to exclude the implied warranty of
merchantability. 9A V.S.A. §2-316(2).

It is doubtful that an implied warranty of fitness for a particular
purpose was created, as it is unlikely that Competent was relying on Magic
Mirror's skill or judgment to select or furnish the bay window. However, if
the implied warranty of fitness is applicable to these facts, the "very
fine print" in the sales invoice may have been insufficient to properly
exclude the implied warranty of fitness. 9A V.S.A. §2-316(2), (3). To
exclude or modify any implied warranty of fitness, the exclusion must be by
a writing and "conspicuous." Although the implied warranty of fitness may
be excluded by expressions like "as is," arguably §2-316(3)(a) requires
that the language call the buyer's attention to the exclusion of
warranties.

Under 9A V.S.A. §2-316(5), any language, oral or written, used by a
seller or manufacturer of consumer goods and services, which attempts to
exclude or modify any implied warranties of merchantability and fitness for
a particular purpose, or to exclude or modify the consumer's remedies for
breach of those warranties, is unenforceable. For purposes of §2-316(5),
"consumer" is equated with the definition of consumer in Vermont's Consumer
Fraud Act. Under the Consumer Fraud Act, "consumer" means any person who
purchases, leases, contracts for, or otherwise agrees to pay consideration
for goods or services not for resale in the ordinary course of his trade or
business, but for his use or benefit, or the use or benefit of a member of
his household or in connection with the operation of his household. Since
the purchaser of the bay window, Competent, does not fit within the
Consumer Fraud Act's definition of "consumer," Magic Mirror had the
capacity to exclude or modify the implied warranties of merchantability and
fitness for a particular purpose. Although Magic Mirror could have done so,
it did not in fact properly exclude the implied warranty of
merchantability. As such, Competent should be able to return the window to
Magic Mirror and recover the money it paid for the window.

The Homeowners would not have a valid claim directly against Magic
Mirror for the defective window, since there was no privity of contract
between them. Under 9A V.S.A. §2-318, express or implied warranties extend
to persons not in privily of contract only if the third party is injured in
person by a breach of the warranty.

II. Steps Acme Must Take

Since Competent purchased the building materials from Acme, and
apparently has not paid for some or all of the materials purchased, Acme
would have a breach of contract claim directly against Competent, for which
it could seek damages in superior court. Since the Homeowners did not have
a contract with Acme, Acme wouldn't have any remedy against the Homeowners
unless Acme complied with Vermont's statute relating to contractor's liens
for labor or material. 9 V.S.A. §1921 et seq. Under the contractor's lien
statute, one who furnishes materials for the erection of a building shall
have a lien upon the improvements and the lot of land upon which the
improvements stand, by giving notice in writing to the owner that a lien is
being claimed for labor or material. Once proper written notice is given,
the lien shall extend to the portions of the contract price remaining
unpaid at the time the notice is received. 9 V.S.A. §1921(b). Acme must
perfect its lien by recording its notice of lien in the town clerk's office
where the real estate is situated. 9 V.S.A. §1923. In addition, to enforce
its lien, Acme must commence an action against the Homeowners within three
months from the time of filing its notice of lien in the town clerk's
office. The lienholder must also cause the real estate to be attached
within the three month period. Filter Equipment Company v.
International Business Machines Corp., 142 Vt. 499 (1983); Newport
Sand and Gravel Company v. Miller Concrete Construction. Inc., 159 Vt. 66
(1992).

III. Advice to Nasty Neighbor

Nasty Neighbor should be advised that he has a valid action against
the Homeowners for trespass. In addition to an action for damages resulting
from the trespass, neighbor should be able to obtain injunctive relief.
Where the right to relief is clear and a remedy at law is inadequate,
specific performance by injunction is appropriate. Campbell Inns, Inc. v.
Vanholzer, Turnure and Company, 148 Vt. 1 (1987). Since real property is
generally considered to be unique, and therefore monetary damages are
generally inadequate, it is likely that Neighbor can obtain a mandatory
injunction from the superior court, directing that the Homeowners remove
the addition from Neighbor's land.

MODEL ANSWER - QUESTION VI - FEBRUARY 1996 Tractors, Inc.'s rights against Advertiser are fairly clear from the facts presented. Tractors' rights against Finance Company are less clear, and will depend upon a careful analysis of the lease. Tractors' rights against Advertiser are clouded only by the pending bankruptcy. Advertiser made a material misrepresentation about the value of the board to induce Tractors to enter into the lease agreement. Tractors' misreoresentation is actionable. Under the Bankruptcy Code, a debt founded on money obtained by false pretenses is not dischargeable in bankruptcy. Tractors can sue Advertiser directly in Superior Court. If Advertiser files a bankruptcy petition, Tractors should litigate this claim and its dischargeability in an adversary proceeding in the bankruptcy court. Tractors' rights against Finance Company are more problematical. If the lease is a UCC Article 2A Finance Lease, Finance Company will not be treated as a seller or lessor of the board. Rather, it will be treated as if it were a lending bank financing the transaction, Advertiser will be treated as the seller and all of Tractors' rights would be determined accordingly. Finance Company's knowledge that the board was worth only $2,000, standing alone, is not sufficient to create a right of action against Finance Company. If Finance Company's and Advertiser's presidents were husband and wife, Tractors' may be able to argue that each company and its principals participated in a conspiracy to defraud Tractors, and Finance Company may have liability to Trac tors notwithstanding the protections that Article 2A provides to finance lessors. If the lease is not a Article 2A Finance Lease, then Finance Company will have made warranties about the board similar to sellers' warranties. If the board malfunctioned two weeks after it was set up in the store, Tractors may be able to revoke its acceptance of the board, and in any event would have a claim that the board was not merchantable. Tractors has the same claim against Advertiser if the lease is an Article 2A Finance Lease. If the board worked perfectly from May until the following January and then failed revocation of acceptance clearly is not available and Tractors' sole claim against Finance Company would be for breach of the warranty of merchantability. Tractors has the same claim against Advertiser if the lease is an Article 2A Finance Lease. --------------------------------------------------------------------------- Board of Bar Examiners Mailing address: 109 State St. Montpelier VT 05609-0702 Office Locaation: 111 State St. Montpelier, VT Telephone: (802)828-3281