Civil Procedure the First Question

Civil Procedure

The first question that needs to be asked is whether or not there is a breach of contract. According to the facts, Barbara and Judi entered into a contract with Linda. The contractual terms were for the opening of a jewelry store in the city of Fullerton. The contract provided that Linda would supply all the jewelry, in accordance with a specified price list, to Barbara and Judy to be sold in their store. Further, the contract included a non-compete agreement, requiring that Linda not personally compete or supply other jewelry retail merchants, either directly or indirectly and located within the city of Fullerton, with her product. The contract further required that Joanne be used as a guarantor so that Linda would be able to offer Barbara and Judi the necessary credit.

The alleged breach of this contract occurred when Barbara went on an extended vacation. During this time, Linda sold jewelry to three additional retailers located within the city of Fullerton and directly competition with Barbara and Judi's store. Doing this, Linda entered into contractual agreements with the new stores obligating her to provide them inventory at a reduced costs and thus selling the product at a lower rate than Judi and Barbara were selling the products. As a result, Judi is goes out of business. By herself, she files suit for breach of contract and for personal damages. When Barbara returns from vacation she learns of the alleged breach of contract and also moves to file suit for breach of contract.

Before the issues of Civil Procedure can be discussed it must first be determined whether or not there was an actual breach of contract. To create a valid contract there must be mutual assent (a valid offer and acceptance), consideration and a lack of defenses. If all these elements are met, then there is a valid contract.

Mutual assent occurs when there is an offer and an acceptance. An offer is an expression of a promise, undertaking or commitment to enter into a contract on certain and definitive terms and that these terms were communicated to the other party. The acceptance occurs when the offeree communicates their agreement to the contractual terms.

In the case at hand, according to the facts, there was mutual assent between the parties. Jodi and Barbara made and offer to Linda for the purchase of her jewelry in their store. Linda in tern agreed. Thus, mutual assent exists between all the parties. However there is a question as to whether Jodi and Barbara were entering the contract as two individuals or as partners in a company. Determining this fact will be make a difference as to against whom the breach was made. If both Jodi and Barbara are parties on the contract, either as partners or two individuals, then either way Linda would have a contractual obligation to both. However, if only one of them are on the contract, Linda only owes a contractual obligation to the one whose name is on the contract.

In order for the contract to be mutual, there must be consideration, or something of value that was bargained for exchange between the parties. The elements of consideration are 1) there must be a bargained-for exchange between the parties and 2) that which is bargained for must be considered of legal value or be of a benefit to the promisor.

In the case at hand, there is mutual exchange between the parties. On the one hand, Judi and Barbara agree to sell Linda's jewelry at their store. In exchange for this, Linda agrees not to sell her jewelry to any of Judi and Barbara's competitors. Since there is mutual accent (offer and acceptance) and a mutual exchange, a contract exists.

After it has been established that a contract has been made between the parties, the third step is to see if there are any defenses that could make the contract either void or voidable. Common defenses include Lack of Capacity, Unilateral Mistake and Misrepresentation may exist.

In certain circumstances, individuals are legally incapable of incurring binding contractual obligations. Timely assertions of this defense by the promisor will make the contract voidable at his or her election. A voidable contract is on that one or both of the parties may elect to avoid or ratify at their own individual choosing. In general, the age of majority is 18. A majority of jurisdictions hold that infants (one who is under the age of 18) lack the capacity to enter into a contract binding on themselves. However, contractual promises of an adult made to an infant are binding on the adult. In summary, a contract entered into between a minor and an adult is voidable by the infant but binding on the adult.

There are several exceptions to this rule, however. One of the primary exceptions is the Necessities Exception. According to this exception, the minor is bound to pay the reasonable value of necessities, which depends on the minor's station in life.

Typically, if both parties are mistaken as to the facts, terms or elements of a contract, then the contract is void due to a mutual mistake defense. In a situation where only one party was mistaken, it is generally held that this is not grounds for voidance of the contract. An exception to this rule is if the non-mistaken party knew or had reason to know of the mistake made by the other party. If they did, then the non-mistaken party will not be allowed to snap up the offer.

If one party misrepresents facts or information to another party with the intent to induce them to enter into a contract, then such contract is voidable so long as the information was material to the reliance.

In the case at hand none of these defenses to the formation of the contract exists. However, there is a possible issue as to the contract being unconscionable. A contract may be considered unconscionable and thus voidable where the clauses are so one-sided as to be unconscionable. Common examples of unconscionable contractual clauses include contracts with inconspicuous risk-shifting provisions, such as disclaimers of warranty buried in the fine print, and contracts of adhesion, or take it or leave it provisions. Whether or not a contract is unconscionable is tested at the time the contract was made and not later. Thus, the contract must have been unfair at the time it was entered into. More often than not, the unconscionability defense is most often applied to situations where one party has substantially superior bargaining power.

In the case at hand, depending on the state laws of the jurisdiction, Linda could have a defense of unconscionability. In some states, limitations are put on non-compete agreements and clauses. The typical reasoning for such limitations is that agreeing to not compete severely limits the rights of one side to a greater advantage of the other party. Because of this inbalance in the terms of the contracts, some states hold that non-compete clauses are unconscionable. If this is the case in the jurisdiction of the case example, than Linda has a defense for voiding the contract.

Assuming no defenses to the contract's formation exist and further assuming that Linda entered into an agreement with both Judi and Barbara, then there was a valid contract. Further, Linda's selling her product to several of Judi and Barbara's competitors was in direct breach of the contractual terms. Thus, for purposes of this discussion, both Judi and Barbara have a valid claim for breach of contract against Linda.

The next step is to review the rules of civil procedure applicable to the case at hand. Essentially, these issues are as follows:

Whether Barbara can intervene in the action under Rule 24.

Whether Barbara should be joined as a party under a Rule 19 motion filed by Linda.

Whether JoAnne can intervene under Rule 24.

Whether Linda can file a motion to implead Rhodesian Diamond company under Rule 14.

According to Rule of Civil Procedure 24, intervention can occur either through intervention by right or permissive intervention. Any party will be permitted to intervene in an action when either a statute confers such an unconditional right or when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties. If such a right does not exist, a party may intervene by permission when the applicant's claim or defense and the main action have a question of law or fact in common.

In the case at hand, Barbara has a right to intervene in the action. Assuming her name is on the contract, then the action filed by Judi for breach of contract, involves her. Further, because Judi filed the action against Linda as an individual, the disposition of the action will impair Barbara's interest in the action and fails to adequately represent her interest. Finally, if Barbara later filed a separate suit against Linda for the same breach of contract, her claim could be barred due to the theory of Res Judicata.

Because Joanne's claim in the action does not directly relate to the breach of contract claim filed by Judi, Joanne does not have a right to intervene in the action. However, she can still intervene under the auspices of permissive intervention. Joanne's claim against Linda, also for breach of contract, shares a common subject with the action filed by Judi in that both actions stem from the same action committed by Linda. Further, Joanne's contract with Linda is directly related to the contract between Linda and Judi and Barbara. Thus, the outcome of the claim filed by Judi will affect Joanne's claim. For these reasons, along with reasons of Judicial economy, it is more likely than not that a court will permit Joanne to intervene in the action at hand.