Legal Improvement Module 4: Start By Reading And Following

Legal Enprovmentmodule 4start By Reading And Following These Instructi

Legal Enprovmentmodule 4start By Reading And Following These Instructi

LEGAL ENPROVMENT MODULE 4 Start by reading and following these instructions: 1. Quickly skim the questions or assignment below and the assignment rubric to help you focus. 2. Read the required chapter(s) of the textbook and any additional recommended resources. Some answers may require you to do additional research on the Internet or in other reference sources. Choose your sources carefully. 3. Consider the discussions and any insights gained from it. 4. Create your Assignment submission and be sure to cite your sources, use APA style as required, check your spelling.

Assignment: 1. Brenda Brandt was admitted to Sarah Bush Lincoln Health Center (Health Center) to receive treatment for urinary incontinence. During the course of an operation, the doctor surgically implanted a ProteGen Sling (sling) in Brandt. Subsequently, the manufacturer of the sling, Boston Scientific Corporation, issued a recall of the sling because it was causing medical complications in some patients. Brandt suffered serious complications and had the sling surgically removed.

Brandt sued Boston Scientific Corporation and Health Center for breach of the implied warranty of merchantability included in Article 2 (Sales) of the Uniform Commercial Code (UCC). Health Center filed a motion with the court to have the case against it dismissed. Health Center argued that it was a provider of services and not a merchant that sold goods, and because the UCC (Sales) applies to the sale of goods, Health Center was not subject to the UCC. Health Center proved that Brandt’s bill was $11,174.50 total charge for her surgery, with a charge of $1,659.50, or 14.9%, for the sling and its surgical kit. Is the transaction between Brandt and Health Center predominantly the provision of services or the sale of goods? Explain your answer.

2. Executive Financial Services, Inc. (EFS) purchased three tractors from Tri-County Farm Company (Tri-County), a John Deere dealership owned by Gene Mohr and James Loyd. The tractors cost $48,000, $19,000, and $38,000. EFS did not take possession of the tractors but instead left the tractors on Tri-County’s lot. EFS leased the tractors to Mohr-Loyd Leasing (Mohr-Loyd), a partnership between Mohr and Loyd, with the understanding and representation by Mohr-Loyd that the tractors would be leased out to farmers. Instead of leasing the tractors, Tri-County sold them to three different farmers. EFS sued and obtained judgment against Tri-County, Mohr-Loyd, and Mohr and Loyd personally for breach of contract. Because that judgment remained unsatisfied, EFS sued the three farmers who bought the tractors to recover the tractors from them. 1. What does the entrustment rule provide? Explain. 2. Did Mohr and Loyd act ethically in this case? 3. Who owns the tractors, EFS or the farmers?

3. Donald Wayne Doyle (Debtor) obtained a guaranteed student loan to enroll in a school for training truck drivers. Due to his impending divorce, Debtor never attended the program. The first monthly installment of approximately $50 to pay the student loan became due. Two weeks later, Debtor filed a voluntary petition for Chapter 7 bankruptcy. Debtor was a 29-year-old man who earned approximately $1,000 per month at an hourly wage of $7.70 as a truck driver, a job that he had held for 10 years. Debtor resided on a farm, where he performed work in lieu of paying rent for his quarters. Debtor was paying monthly payments of $89 on a bank loan for his former wife’s vehicle, $200 for his truck, $40 for health insurance, $28 for car insurance, $120 for gasoline and vehicular maintenance, $400 for groceries and meals, and $25 for telephone charges. In addition, a state court had ordered Debtor to pay $300 per month to support his children, ages 4 and 5. Debtor’s parents were assisting him by buying him $130 of groceries per month. 1. What legal standard must be met to have a student loan discharged in bankruptcy? 2. Did Doyle act unethically in trying to have his student loan discharged in bankruptcy? 3. Should Doyle’s student loan be discharged in bankruptcy? 4. PSC Metals, Inc. (PSC) entered into an agreement whereby it extended credit to Keystone Consolidated Industries, Inc., and took back a security interest in personal property owned by Keystone. PSC filed a financing statement with the state, listing the debtor’s trade name, “Keystone Steel & Wire Co.,” rather than its corporate name, “Keystone Consolidated Industries, Inc.” When Keystone went into bankruptcy, PSC filed a motion with the bankruptcy court to obtain the personal property securing its loan. Keystone’s other creditors and the bankruptcy trustee objected, arguing that because PSC’s financing statement was defectively filed, PSC did not have a perfected security interest in the personal property. If this were true, then PSC would become an unsecured creditor in Keystone’s bankruptcy proceeding. Is the financing statement filed in the debtor’s trade name, rather than in its corporate name, effective? Explain your answer.

Paper For Above instruction

Question 1: Transaction Predominantly Service or Sale of Goods

In analyzing whether the transaction between Brenda Brandt and the Health Center is predominantly a service or sale of goods, the key factor is to determine the primary nature or essence of the transaction. The UCC applies to the sale of goods, but not broadly to services. In this case, the total bill was $11,174.50, with only $1,659.50 (approximately 14.9%) attributable to the sling and surgical kit. The majority of the charges are for the hospital's services, such as operating room, anesthesia, nursing care, and other medical services.

According to established legal principles, if a contract is principally for providing services with incidental sale of goods, the transaction is primarily classified as a service contract. Conversely, if the sale of goods is the principal factor with services being incidental, then the UCC's sales provisions apply. Courts typically analyze the contract's purpose, the relative value of goods versus services, and how the parties labeled the transaction.

Given that the predominant part of the bill relates to medical services and only a minor portion to the sling and its kit, the transaction should be classified as a service—healthcare provision—rather than a sale of goods. Therefore, the UCC's Article 2 (Sales) would not govern this transaction, and the health center would not be liable under the implied warranty of merchantability under the UCC.

Question 2: Entrustment Rule and Ownership of Tractors

The entrustment rule provides that if a person (such as a merchant or authorized agent) entrusts goods to another, who then sells goods to a third party in good faith, the third party acquires rights to the goods despite the seller's lack of authority to sell. This rule protects innocent buyers acting in good faith when goods are entrusted to a merchant who has authority to sell.

In this case, EFS entrusted the tractors to Tri-County, which then was supposed to lease them to farmers, but instead sold them. Although Tri-County exceeded its authority by selling, the question hinges on whether the trust was properly given and whether the sale was in good faith. Given that EFS retained ownership rights through the leasing agreement and the tractors were on Tri-County’s lot, under the entrustment rule, Tri-County could have had authority to sell if it was a merchant entrusted with the goods, but here, the sale breaches the trust.

Regarding the ethics, Mohr and Loyd, as owners, acted unethically by selling tractors they knew belonged to EFS based on their understanding that tractors were to be leased, not sold. This breach of trust indicates a lack of integrity and ethical misconduct in handling company assets and contractual obligations.

Ownership of the tractors remains with EFS until a valid sale or transfer occurs. Since Tri-County sold the tractors without authority, and the sale was not protected by the entrustment rule (as the sale was not in good faith or authorized), the ownership of the tractors likely remains with EFS. The farmers who purchased the tractors may be considered to hold good title only if they are protected by the bona fide purchaser doctrine, which is not the case here.

Question 3: Student Loan Discharge and Ethical Considerations

To discharge a student loan in bankruptcy, the debtor must demonstrate "undue hardship," usually through the Brunner test, which requires proving that: (1) unless the loan is pardoned, the debtor cannot maintain a minimal standard of living; (2) additional circumstances exist indicating that this situation is likely to persist; and (3) the debtor has made good faith efforts to repay the loan.

In Doyle’s case, his minimal income and substantial expenses suggest that he might face undue hardship, satisfying the legal standard for discharge. Ethically, attempting to discharge a student loan under hardship is debated; some view it as exploiting legal provisions, while others see it as a legitimate avenue for relief when repayment would cause significant hardship. Given Doyle’s circumstances, seeking discharge aligns with legal standards if he can prove undue hardship.

Whether Doyle’s student loan should be discharged hinges on his ability to demonstrate that repayment would impose undue hardship. Based on his income and expenses, he appears unable to make payments without sacrificing basic needs, making discharge appropriate under legal criteria.

Regarding the ethical question, Doyle acted within his rights, especially considering his financial hardship and the fact that he did not benefit from the program he paid for. It is justified to seek relief when faced with genuine inability to pay, and doing so does not constitute unethical conduct.

Question 4: Financing Statement Filed in Trade Name

The effectiveness of a financing statement depends on whether it properly perfects the security interest. According to the UCC, for a security interest to be perfected, the financing statement must reasonably identify the debtor and the collateral. When a debtor operates under a trade name different from its legal name, the key is whether the filed name reasonably identifies the debtor.

In this scenario, Keystone filed the financing statement using its trade name, “Keystone Steel & Wire Co.” instead of its legal name, “Keystone Consolidated Industries, Inc.”. Courts generally hold that if the trade name sufficiently indicates the identity of the debtor, the financing statement may be effective. However, if the trade name is not sufficiently linked or is misleading, the security interest may not be perfected.

Most jurisdictions apply a "reasonableness" standard, and courts often look at whether a carful search using the correct legal name would have disclosed the financing statement. Since the trade name used is very close to the actual name and likely to be recognized as the same entity, the filing could be considered effective as a matter of law. Nevertheless, best practice is to file under the legal name to ensure perfection.

Thus, in this case, filing under the trade name “Keystone Steel & Wire Co.” may be effective if it reasonably identifies the debtor, but it carries a risk of unenforceability. To avoid complications, the financing statement should have been filed in the debtor’s exact legal name, “Keystone Consolidated Industries, Inc.”.