Format Requirements:

Label each Section and part of analysis, as Section A, 1., Section A, 2., etc.

Analyses should be comprehensive, fully supported/justified/explained, specific, and detailed in rationale (this is a most important requirement of this project)

Analyses should be paragraph format

All in text citations must be in APA proper format

Each part should a minimum of 3-4 paragraphs, and likely will be, and should be, longer to be adequately comprehensive.

Follow directions for assignment closely

Read the following case scenario and respond to analysis instructions at the end.

RESOURCES:  Support all conclusions with legal concepts, applicable law, logical reasoning and in-text cites to relevant resources.  You may use some outside resources, but rely primarily on in-class assigned materials.

Scenario: Midwest Grains, Inc. (Grains) is a large, privately-owned Iowa-based supplier of various grains to manufacturers and retailers throughout the country.

National Bakers, Inc. (Bakers) is a large, family-owned corporation based in New Jersey with operations in 15 states.

On August 30, representatives for Grains and Bakers verbally agreed for Grains (1) to sell 1000 lbs. of wheat grain to Bakers for market price, to be shipped via truck to the Bakers’ warehouse in New Jersey by September 12, 2016, and (2) to sell 100 lbs. of ground corn to Bakers for market price, to be shipped via truck to the Bakers’ warehouse in New Jersey by November 1, 2016.

Grains and Bakers have engaged in previous business sales transactions and always commit their verbal agreements to signed written contracts via email. On September 3, Grains and Bakers completed a written contract to reflect their agreement for the sale and shipment of grains.

USE SUBHEADINGS LISTED BELOW.

CONTRACT

1. Write a valid enforceable contract that reflects the September 3 agreement

between Grains and Bakers, as described above.

This is to be your own work, not use a standard form contract from the internet.  A standard form contract will not from the internet will result in substantial point deductions.

This is a relatively brief, simple contract.  Do not include sections not relevant to the precise agreement as stated in the facts.

CONSTITUTIONALITY ANALYSIS

2. Assume that beginning in the summer, 2016, there is an oversupply of grain that is

driving prices down. Consequently, on September 1, 2016, US Congress enacted a law, popularly called the Limited Grain Act (this is a fictitious act for purposes of this assignment; do look for the act on the internet) that temporarily bans the production and sale of all grains in the US, and provides for payment of a subsidy to farmers for not growing grains.

Grains and Bakers were unaware of this ban when they signed the September 3 contract for the sale of grains.

Analyze and discuss the (a) the constitutionality of the Limited Grain Act explaining the legal basis for the law and why it is constitutional or unconstitutional, and  4-6 paragraphs or longer

(b) the validity of the September 3 sales contract between Grains and Bakers explaining the conclusions and rationale in detail.   3-6 paragraphs or longer

The following resources may not be used:

Any Wiki sites

Law firm or company/corporate newsletters or advertisements

Local or regional newspapers (MAJOR Metropolitan newspapers, e.g., Wall Street Journal, New York Times, etc. may be used)

Blogs

Social Media

Instructor Notes or any Professor posted info in the classroom

Direct quotes from any resources may not be used and will result in point deductions.  Paraphrase any attributions to outside resources.

Business periodicals, e.g., Forbes, The Economist, Business Week, law review articles, academic articles in professional journals, e.g., The Business Law Journal, or business law journals published by law schools, e.g., The Business Law Journal – Penn Law School, etc. are appropriate and useful resources. 

ADDITIONAL MATERIAL FOR ASSIGNMENT

Week 6 Cases

http://www.leagle.com/decision/20041473890So2d583_11387/DAIGLE%20v.%20TRINITY%20UNITED%20MORTG.,%20L.L.C.

http://www.leagle.com/decision/2004761306FSupp2d455_1716/AIH%20ACQUISITION%20CORP.,%20LLC%20v.%20ALASKA%20INDUS.%20HARDWARE,%20INC

Week 6 Case Sumaries

Daigle V. Trinity United Mortgage    (agency) 890 So.2d 583 (2004)

Court of Appeal of Louisiana, Third Circuit

Facts:

The Daigles decided to build a home in Louisiana and purchased a lot for that purpose. They contacted Trinity United Mortgage Company, L.L.C. and established a relationship with Diez, a representative of Trinity, to secure financing for their home. They met with Diez in July, 2001 to sign a construction loan that Diez had arranged through Union Planters Bank. Trinity received an origination fee in this transaction. According to the Daigles, Diez told them at this meeting that he had secured a permanent lender for them when construction of the home was complete, that they could pay the interest on the interim construction loan, however, it wasn’t required because any interest due on the construction loan would be folded into the permanent loan at the time they closed on the permanent loan.

The Daigles completed construction on their home and attempted many times, unsuccessfully, to contact Diez at Trinity’s office.   In fact, Diez was no longer an agent of Trinity. He had left the employ of Trinity a few days after the July 2001 meeting with the Daigles. The uncontroverted testimony was that neither Trinity nor Diez disclosed to the Daigles that he was no longer a Trinity agent. The Daigles continued to believe they were dealing with Trinity.

The Daigles voluntarily paid the interest on the construction loan while their home was being built.  Based on the earlier representations by Diez that any interest owed could be folded into their permanent loan, the Daigles stopped making interest payments to Union Planters.

Ultimately, Union Planters sued the Daigles because of their failure to make the interest payments on the construction loan. The Daigles were forced to borrow money from private individuals to pay Union Planters to avoid the lawsuit from proceeding; through their own efforts, they later obtained permanent financing through another source.

The Daigles sued Trinity and Diez to recover interim loan interest on the construction loan, and attorney’s fees they expended to defend themselves in the Union Planters case.

The court ruled in favor of the Daigles and awarded damages.

Trinity appealed arguing that any harm to the Daigles occurred after Diez left the employ of Trinity.

Opinion:

The Court of Appeals concluded that representations made by Diez, upon which the Daigles relied, including that he had secured permanent financing for them upon completion of the home, and that the Daigles were not required to make interest payments on the interim loan, were made while he was an agent representing Trinity.   The court also pointed out that a principal (in this case, Trinity) is obligated to notify third parties with whom its agent is authorized to contract upon the termination of the agency, otherwise the principal is bound to perform the obligations undertaken by the agent.

Trinity failed to notify the Daigles that Diez was no longer its representative in spite of the Daigles’ attempts to contact Diez through Trinity. Trinity is, therefore, responsible for Diez’s actions with regard to the Daigles.

Affirmed.

AIH Acquisition Corp, LLC v. Alaska Industrial Hardware, Inc.   (promissory estoppel, agency) 306 F.Supp.2d 455 (2004)

United States District Court, S.D. New York

Facts:

The plaintiffs in this case, AIH Acquisition, a holding company of Lincolnshire Management, began negotiations to purchase and hold Alaska Industrial Hardware (“AIH”) of Anchorage, Alaska. Lincolnshire, AIH Acquisition and AIH entered into a commitment letter expressing the parties’ intent that “the Buyer and the Company, the Seller and its agent will exert every reasonable effort to negotiate and execute a definitive Agreement, in form and substance satisfactory to the respective parties and their attorneys.” The commitment letter also stated that “the transaction shall be subject to the execution and delivery of a definitive stock purchase agreement.” Boehm, an officer and the majority shareholder of AIH, personally initialed each page of the document.

Over the next few month, all parties engaged in due diligence, communicated often via meetings, telephone, emails, faxes, exchanged drafts of the purchase agreement and appeared to have reached a final agreement and a definitive Stock Purchase Agreement. Boehm’s lawyer informed counsel for AIH Acquisition that, ”…We are expecting to have Joe Boehm sign the Agreement early next week and attempt to close during the first week in March.” Subsequently, Boehm refused to sign the agreement demanding more money.

After further meetings, another of Boehm’s lawyers advised AIH Acquisition that “Joe [Boehm] has accepted the deal.” The parties then shook hands on the deal, and a revised draft of the Stock Purchase Agreement that was executed and signed by plaintiffs, and approved by Boehm’s lawyer who stated Boehm would sign the Agreement thatnight after the dinner to celebrate the deal or, at the latest, the next morning. However, Boehm continued to refuse to sign the agreement.

Plaintiffs sued to enforce the contract.

Opinion:

The Court reasoned, “There are several ways to map the path to the just and proper conclusion here. The first is agency. Attorneys…acted as Boehm’s agents for the purpose of reaching a binding stock purchase agreement. An agency relationship requires that both the principal and the agents take affirmative steps to “assure the success of a cooperative effort. The burden is not solely on the agent. The principal, too, must use his best efforts to cooperate and ‘cannot by act or omission thwart the effectiveness of the agency.’***Moreover, a principal must avoid `conduct towards third persons [that] prevents the accomplishment of the work of the agent.’***Thus, Boehm, who at least twice told his attorneys he was satisfied and there was a deal, may not defeat the efforts and good faith representations that his attorneys…”

The Court further stated that the doctrine of promissory estoppel applies, and ruled, “…notwithstanding Boehm’s refusal to sign the SPA, I find here the existence of a binding obligation on his part to sign under the doctrine of promissory estoppel, which promise Boehm has wrongfully flouted. Under New York Law, promissory estoppel may be invoked where there is (1) a clear and unambiguous promise to sign; (2) a reasonable and foreseeable reliance by the party to whom the promise is made; and (3) an injury sustained by the party asserting the estoppel by reason of his reliance.”

The Court therefore, held that there was “…a fully-written contract -a deal- the terms of which were complete and final” and signed by the plaintiffs at Boehm’s lawyer’s request, with Boehm’s full knowledge, and with the promise that Boehm would also sign that evening or the next day. Thus, there was a valid contract for the sale of AIH to AIH Acquisition even absent Boehm’s signature.

So ordered.

Rubric Name: Written Assignment (20%)