February 2005 - Vermont Bar Examination Essay Questions

[Question I]
[Question II]
[Question III]
[Question IV]
[Question V]
[Question VI]

QUESTION I - FEBRUARY 2005

QUESTION II - FEBRUARY 2005

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QUESTION III - FEBRUARY 2005

Steve and Sally Seller own an older home in Quaint, Vermont. They wish to reduce their expenses by moving to a newer house.  Through a local broker, they list the house for $250,000.

Brian and Barbara Buyer plan to move to Vermont.  They look at the Sellers' home and offer $200,000.

The Sellers read the offer, and they are pleased to see that the Buyers can close in only 30 days.  The Sellers are not prepared to accept the $200,000, however, and counteroffer at $225,000.

The Buyers raise their offer to $225,000, but they want a contingency that allows them to postpone the closing for up to 30 days in order to sell their Connecticut home. The Sellers agree to sell for $225,000 and verbally agree to the possible postponement.  A Purchase and Sale Contract is prepared by the broker and signed by all the parties on December 1, 2004.

The Purchase and Sale Contract has several provisions that are relevant to the parties' obligations.  They are:

On December 27, 2004, the Buyers' attorney searches the Sellers' title and finds a defect.  She phones the Sellers' attorney, as is the custom and practice in the county, and tells him about the defect.  They agree that the problem may take more than 30 days to solve. The Buyers' attorney tells the Sellers' attorney that she would recommend a 60 day extension and she will call her clients to get their approval.

When the Buyers learn of the problem, they call the Sellers to tell them that they really want the house, and that they will give them 60 days to cure the title problem.  They also tell them that they will need at least 21 days' notice of the new closing date to have funds available for the closing.  The Sellers agree.

Subsequently, the Buyers have a change of heart about the extension. On January 14, 2005, the Buyers' attorney concludes that the Sellers' attorney cannot get the title cleared in 30 days, and she calls the Sellers' attorney to tell him.  The Sellers' attorney tells her that Sellers have already told him that they talked to the Buyers who agreed to give them 60 days.  The Sellers' attorney has taken his time doing the research necessary and has just begun the process to clear the title.  While he is confident he can cure the problem in 60 days, he knows that he can no longer do so in 30 days.

On January 15, 2005, the Buyers notify the Sellers, in writing, that they are exercising their right under the contract to terminate the contract, since the Sellers' attorney has acknowledged that his clients cannot convey the marketable title required under the contract.  They say that since it is impossible for the Sellers to comply with the contract, the Buyers do not have to wait until the 30 days have expired.

The Sellers, through their attorney, respond by saying that they have a minimum of 30 days to cure the defects, and that since they have relied on the Buyers' promise to give them 60 days, they are entitled to the 60 days.

On February 15, 2005, the Sellers notify the Buyers that they have a marketable title and are ready, willing and able to close immediately.  The Buyers respond by saying that the Sellers did not perform within the 30 days required and that they are excused from performing themselves.  In addition, since they did not get 21 days' notice as agreed, they do not have the funds with which to purchase the house anyway.  The 60th day passes and no closing occurs.

1.    Discuss why the Statute of Frauds applies to the Purchase and Sale Contract of December 1, 2004.

22.      2.    How do the following facts affect the Purchase and Sale Contract of December 1, 2004:

           
a.   The Sellers' verbal agreement during the contract negotiations to extend the closing by 30 days for the Buyers to sell their home.
           b.
  The Buyers' attorney's verbal notice of December 27, 2004, of the title defect to the Sellers' attorney.
           c.
  The Sellers' agreement of December 27, 2004 to give the Buyers 21 days' notice of rescheduled closing date.

           3.    Discuss whether the Sellers breached the contract by not performing or being able to perform within 30 days of December 27, 2004.

4.        4.    Discuss whether the Buyers breached the contract by not closing within the 60 day period  that they verbally agreed to give to the Sellers to cure the title defect.

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QUESTION IV - FEBRUARY 2005

The Vermont Legislature, concerned with reports that unscrupulous promoters in other states have sponsored bicycle races under conditions that were not safe for the riders, enacts a statute establishing the Vermont Board of Bicycle Racing.   The legislation empowers the Board to promulgate regulations establishing minimum standards for ensuring that races are safe.   The legislation also empowers the Board to issue orders, following notice and an opportunity for a hearing, concerning the enforcement of its regulations.   The legislation states that parties may appeal Board decisions to the Vermont Supreme Court.

The Board promulgates regulations, including the “Unsafe Rider Rule,” providing that any rider suspended for unsafe riding in another state may not race in Vermont during the period of the suspension.   The Legislative Committee on Administrative Rules approves most of the Board’s regulations, but disapproves the Unsafe Rider Rule because a bare majority of its members think the regulation goes beyond the intent of the Legislature.   In response, the Board makes no changes in this Rule because it believes that races can only be safe if dangerous riders are excluded.

Mario Cipollini, bored with his retirement following several suspensions in Europe, for numerous reasons that may have included allegations of dangerous riding, announces that he will compete in the new Tour of Vermont race.   The Board immediately issues a notice to Mr. Cipollini stating that he may not participate because of the Unsafe Rider Rule.   The Board attaches to the notice copies of two reports by cycling authorities in Europe suspending Mr. Cipollini’s right to participate in European bike races.   The reports contain opinions from race officials that Mr. Cipollini was riding unsafely and endangering other riders in many of his races, although it is unclear whether that was the reason for the suspensions.   The notice states that Mr. Cipollini may request a hearing before the Board.

Mr. Cipollini, resplendent in the finest Italian suit you have ever seen, comes to your office for advice.   He wants answers to the following questions:

1.   Is the Unsafe Rider Rule enforceable?   Discuss.

2.   Can Mr. Cipollini challenge the Board’s action in a court?   Discuss.

3.   Will the European reports be considered as evidence in any hearing?   Discuss.

4.   Will a Board suspension be upheld?   Discuss.

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QUESTION V - FEBRUARY 2005

Grandpa was the sole owner of a successful retail furniture establishment, "Grandpa's Grotto Inc.," in Goshen, Vermont.  He died on January 1, 2005, leaving his only child, Pat, age 53 as the sole heir of his estate.  Grandpa's Grotto was organized as a domestic corporation pursuant to Vermont law.  Grandpa and Pat were the sole directors of the corporation.  However, Pat was neither an officer of the corporation, nor did he have anything to do with the day-to-day operation of Grandpa's Grotto.  Pat has no desire to operate the business now that Grandpa has passed away.  He would prefer to receive a steady source of income and retire.  After Grandpa's estate has passed through all necessary probate and accounting procedures, the shares of Grandpa's Grotto have been decreed to Pat, and all of the estate's required tax returns have been filed, he comes to you for advice.

    1. Explain what benefits, if any, there might be in converting the company to a closely-held corporation pursuant to the Vermont Business Corporations Act.
    2. Instead of selling the business, Pat is considering hiring his daughter Liz, age 31, to run the business for him. Explain how could he best structure the business to entice Liz to leave her successful branch  manager's position at a large Boston department store by slowly passing ownership of Grandpa's Grotto to Liz while maximizing the revenue stream from the business to support Pat's retirement.
    3. How could Pat's income stream be protected once Liz obtains a majority interest in Grandpa's Grotto?
    4. How can Liz's interest in the company be protected from Liz's estranged step-mother (Pat's current wife) in the event Pat were to die before Liz gains complete ownership of the company?
    5. What would be the tax implications to Pat, Liz and the corporation for each of your proposals in response to questions 2, 3 and 4?

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QUESTION VI - FEBRUARY 2005

Clarence Client hired Laura Lawyer to represent him in connection with claims against his former employer, Acme, Inc., arising from Client’s termination from his job.  Client’s employment contract stated that he could only be fired for cause, including poor job performance.  His employer stated that he was being terminated for poor performance, but Client insisted that he was as good a worker as his peers.  Lawyer grilled Client thoroughly to make sure she was getting the whole story.

After meeting with Client, Lawyer immediately filed a complaint against Acme in Superior Court alleging that Acme had wrongfully terminated Client.  Attorney Olivia Oppenheimer entered an appearance on behalf of Acme and simultaneously filed a motion for summary judgment.  She attached to her motion an affidavit from Client’s old supervisor stating that Client was terminated because he worked extremely slowly on the assembly line.  In addition, Oppenheimer produced affidavits from a half-dozen other Acme employees who had worked with Client attesting to Client’s slowness and lack of productivity.  Oppenheimer described the lawsuit as frivolous, suggested that Lawyer had breached her ethical duties by filing a baseless suit, and moved for sanctions against Lawyer.

After reviewing these motions, Lawyer began a thorough investigation, setting out to personally contact and interview all fifteen of the Acme employees who had worked on the assembly line with Client and Client’s former supervisor, as well as the top manager of all employees at the facility where Client had been employed.  After Lawyer had reached and spoken to nine Acme employees who had worked with Client, Attorney Oppenheimer learned of her investigation and wrote Lawyer a letter accusing Lawyer of unethical conduct and demanding that Lawyer stop contacting Acme employees.

By that time, most of the employees Lawyer had contacted confirmed that Client was exceptionally slow.  However, one of the Acme employees, Annie Auntie, who happened to be Client’s aunt, reported that Client worked just as fast as everyone else on the line.  She stated that Client’s supervisor had told her that the real reason Client was terminated was because the supervisor didn’t like Client and was tired of working with him.

Analyze in detail each of the following questions:

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