To: Mary J. Novak

From: 707528848

Date: September 2, 1998

Re: Dr. James Richards: Cal. Civil Code Section 1511 Analysis

Dr. James Richards is currently employed by NutritionProcess (NP), a

national company that provides lifetime weight loss products to its clients. Dr. Richards who holds a medical degree and is also a pharmacist entered into a five year renewable contract with NP during May of 1995. The terms of the contract provided Dr. Richards would work exclusively for NP beginning in June 1995 for the sole purpose of distributing the weight loss drug known as Fen-phen. Fen-phen refers to the joint use of fenfluramine and phentermine. In return NP agreed to refer to Dr. Richards all of its South Bay Area customers who were pre-screened to benefit from this drug. NP agreed to pay Dr. Richards $25.00 for each consultation and Dr. Richards agreed to pay NP $500.00 per month rent for office space provided by NP. Dr. Richards was responsible for all prescriptions of the drug and for follow-up appointments with NP customers who were prescribed it. The contract specifically stated that it is governed by the laws of California and change in laws in other jurisdictions are not an excuse for non performance.

There are two sections in the contract that specifically mention Fen-phen. The first clause states:

The second relevant clause reads as follows:

After three years of a successful working relationship with NP, referrals to Dr. Richards have all but disappeared. This happened because of a recent FDA decision to withdraw its approval of fenfluramine and an order for manufacturers to withdraw it from the market. Although the contract includes no minimum amount of patients guaranteed by NP, Dr. Richards now gets less than 50 patients a month compared to an average of 600 before the FDA announcement. Because of this dramatic drop in patients and an anticipated further drop, Dr. Richards asked NP to renegotiate his contract. NP refused, and after five months of minimal business and being placed in a precarious financial situation, Dr. Richards has asked for our help in breaking his contract.

Because Dr. Richards is no longer able to distribute fenfluramine, an essential ingredient in Fen-phen, which has resulted in a dramatic drop of customers, can he get out of his contract with NutritionProcess, as allowed under California Civil Code Section 1511?

1. When such performance or offer is prevented or delayed by the act of the creditor, or by the operation of law, even though there may have been a stipulation that this shall not be an excuse .…

Cal civil code section 1511.

Because Dr. Richards can no longer distribute Fen-phen he has reason to be excused from his contract as specified in California Civil Code section 1511. His performance in the contract has been prevented by "operation of law".

It is probable the court will find sufficient evidence to allow Dr. Richards to get out of his contract with NutritionProcess. In California, "The want of performance of an obligation … is excused … when such performance or offer is prevented or delayed … by the operation of law …." Ca. Civil Code § 1511. The code goes on to provide that this rule is still valid, even if there was a stipulation in the contract specifying the rule will not be used as an excuse.

Although there is a section in the contract which states the contract "is governed by the State of California and no change in laws … shall serve as an excuse for non-performance," this cannot be used as a reason to keep Dr. Richards in the contract. Section 1511 specifically bans against this type of clause: "[a contract may be excused] even though there may have been a stipulation that [this code] shall not be an excuse." Since the FDA decision is made at a federal level, this is binding on state laws, meaning the "choice of law" clause cannot be used as an excuse for non-performance. This leaves Dr. Richards to show his situation falls within the remaining half of section 1511. He must demonstrate fulfillment of the contract has been prevented or delayed by operation of law. Sect. 1511.

In February the FDA revoked the approval of fenfluramine, which when combined with phentermine is referred to as Fen-phen, and ordered it off the market. If there was reason to believe fenfluramine would be re-approved, it might be possible to say Dr. Richard’s work has only been delayed. In Dorn, delay was not a reason for excuse from the contract when the delay did not effect the essence of the contract. However, approval of fenfluramine has been revoked and should be considered permanent. Because of the permanent unavailability of fenfluramine there is no way Dr. Richards can continue to distribute Fen-phen to NP’s patients. This is to say he has been prevented from distributing it because of recent FDA decisions.

In Dorn, the court held that the conveying and delivering of a home for purchase and sale was merely delayed and not prevented. Because the sale was only delayed, there was no basis on which to break the contract for the sale of the home. When the inability to perform is temporary it does not effect the essence of the contract. Dorn. Additionally the court felt delay did not matter because plaintiffs in the case were excusing the delay and wanted to carry out the sale. Had the plaintiffs not chosen to excuse the delay, 1511 most likely would have applied.

The court held delay did not matter in Dorn because delay only related to the secondary purpose of the contract. Operation of law delayed the building of a new home which in turn delayed the sale of the existing home. The building of the new home was only a side effect of the contract; it was not the primary purpose. In Dr. Richards’ case, the primary purpose of his contract is to distribute Fen-phen. Although he is still able to distribute phentermine, the distribution of it is not the reason he agreed to the original contract. Had the primary purpose of the contract in Dorn been prevented or delayed the court probably would have found the contract excusable by operation of law. In Dr. Richards’ situation the distribution of Fen-phen is the primary purpose. As stated in the contract both parties agreed Dr. Richards would be "solely responsible" for the distribution of Fen-phen. This was stated in two separate sections of the contract. When the FDA revoked approval of fenfluramine it was no longer possible for Dr. Richards to meet those requirements in the contract. Therefore 1511 should be sufficient to allow him to be excused from his contract as interpreted in Dorn.

NutritionProcess may argue not all of the contract with Dr. Richards has been prevented by the FDA decision. The contract also stated Dr. Richards was to be available "for follow-ups with those NP customers who are prescribed these drugs." It may be possible to argue the entirety of the contract has not been prevented. Patients that have already been prescribed the drug will need further consultations. In fact, the FDA recommends that users of Fen-phen contact their doctors for evaluations. NP may say the stipulation in the contract necessitating follow-ups includes these FDA recommended evaluations, meaning that his contract has not been fully prevented.

NP could interpret Dorn to mean a delay is not an excuse for breaking a contract. If this is the case, they could argue the FDA recommendation is only temporary, and it is possible Dr. Richards will soon be able to continue distributing Fen-phen. In the meantime, as discussed above, he continues to be working within the contract.

Another argument NP could raise is the fact that there never was a specified number of patients per month to be sent to Dr. Richards. Although his patients have dropped from an average of 600 to 30 patients last July, this is different than if NP was sending no patients.

To these few patients Dr. Richards has been distributing phentermine, which is an essential ingredient in Fen-phen. Because Dr. Richards is still able to distribute phentermine, NP may say his duties in the contract have not been fully prevented, as would be necessary under section 1511 if he is to get out of his contract. The contract stipulated Dr. Richards would be available for follow-ups for "these drugs." This could be interpreted as meaning follow-ups for either phentermine or fenfluramine, regardless of whether they were used jointly or separately. As 1511 is interpreted in Dorn, the essence of the contract must be prevented by an operation of law in order for it to be broken. Under this interpretation Dr. Richards’ performance has not been prevented.

While NP may argue the essence of the contract actually has not been prevented, this will be difficult to do successfully. The contract clearly stated the sole purpose was for the distribution of Fen-phen. The distribution of only one of these ingredients, phentermine, is not the same as the joint distribution of both the drugs. For this reason, and the reasons discussed above, it is likely Dr. Richards will be excused from his contract with NP by "operation of law" as specified in section 1511 and interpreted by the court in Dorn.

`g

Dr. Richards can lawfully break his contract with NutritionProcess under California Civil Code 1511. This act provides "The want of performance … is excused by the following causes…: 1. When such performance or offer is prevented or delayed … by the operation of law…."

Statement of Facts

• crucial information, context of the problem
• group like facts together
• ending may include what relief client wants

Question Presented

- one sentence that poses precise legal issue

• if facts have already been presented, can write a very specific question (ex: Is the contract between Mr. Smith and Mr. Jones valid?)
• more general if reader does not yet know the facts
• identify the cause of action
• do not make conclusions
• don’t make it too long

Short Answer or Conclusion

Applicable Statutes

Discussion

Final Conclusion

MEMO NOTES LAWAR

In the SPRING OF 1995 Dr. Richard’s signed a contract with NP. Under this contract R agreed to work solely for NP (for the purpose of…) in the distribution of FF. After 3 years of a successful working relationship with NP, referrals to R have all but disappeared. This happened because of a recent FDA decision to withdraw its approval of the drug. Dr. Richards now gets less than 50 patients a month compared to an average of 600 before the FDA announcement. Because of this dramatic drop in patients and an anticipated further drop, Dr. Richards has asked to renegotiate his contract. NP refused and after 5 months of minimal business, Dr. Richards has asked for our help in breaking his contract.

1511. Can break contract for:

1. prevented or delayed performance (written notice must be given of intention to bring suit);
2. when performance is impossible due to outside uncontrollable factors;
3. when debtor is induced not to make it, by any act of the creditor intended or naturally tending to have that effect (done at or before performance offer is made. Cannot be broken before that time)

Legal memo: written for a person who knows little about the case or nothing about it. Memos need proper support. Must support all statements of law. See page 24. When introducing law in legal memo need a citation very often. In our situation only have 2 cittions. Just to the statute and to case.

-for our work just write Dorn whenever there is supposed to be a case cite

• for citing the case just put Section 1511 wherever we think the rule should be
• follow appendix C for putting together our memos.

FOLLOW THIS FORMAT FOR MEMO DUE WEDNESDAY!!!!

Header – she will give it to us

Confidential and Privileged Attorney-Client Communication

To: Mary J. Novak

From: 707528848

Date: September 2, 1998

Re: Dr. James Richards: Cal. Civil Code Section 1511 Analysis

Facts – always put the statement of facts first (because writing for neive reader) include enough facts so reader can understand it. Also put in all relevant facts for our legal issue. Might want to write the facts last. Fact section needs to be readable like a story. Use all relevant facts both good and bad. Is an objective memo so need both sides. Use objective language.

1. owner is liable when dog bites another person when that person is lawfully on property of owner.
2. Not liable if:

1. displayed in prominent place
2. an easily readable sign reading:
3. bad dog

This case only deals with issue of "easily readable sign"

Apply statute to Verski case:

Did she satisfy section a? Yes she was lawfully on property. (ALTHOUGH OBVIOUS HAVE TO GO THROUGH EVERY SECTION OF STATUTE IN MEMO) There a sign? Yes. Was it displayed in a prominent place? Yes. Did it say BAD DOG? Yes.

What would Verski argue?

• Tot case says that sign needs to be easily readable by a person likely to be on the premises.
• Therefore they should have expected people to be on property who do not read English.
• A person can read a language but that does not mean a person could understand it. Like I could read German, but not understand it all.
• Owners did warn her that they have a dog.

What argument would owners make?

• easily readable was meant to see the sign (have to see the words, but not understand them) but not content.

How would you resolve case?

• that we think Mrs. Verski because she might loose on this issue. Might not prevail.
• The tot case is near a school (where little kids could not read English) is analogous to having a house that is visited by many people who cannot read English. Owners should have expected to have visitors not reading English.
• No correct answer.

Dorn Brief

The want of performance of an obligation, or of an offer of performance in whole or in part, or any delay therein is excused by the following causes, to the extent to which they operate:

1. When such performance or offer is prevented or delayed by the act of the creditor m, or by the operation of law, even though there may have been a stipulation that this shall not be an excuse. …

Cal civil code section 1511 ("Section 1511").

First paragraph is thesis paragraph. One sentence conclusion (thesis), and the specific language of the statute.

REFER to clients by name. Use third person. Don’t use things like "our client"

Don’t alternate between arguments. Just put one argument for a few paragraphs and then the other argument. End with a rebuttal.

SHORT ANSWER/Conclusion

One liner and then very brief summary of analysis.

SEE APENDIX C for an example.

In applicable statute just include what she gave us above.

Should have 2 pages of double spaced facts is about what we should have. Make sure we quote a few sections of the contract.

Preliminary Analysis

Does this statute apply?

Regulations are laws.

Dorn says: that the law in question has to directly effect the contract. Essence of the contract must be effected.

Dorn left out the word "delay" when they quoted code.

Under Dorn can a delay ever be excused? When the delay is not excused. (in Dorn the D excused the delay) In our case delay is not being talked about. We are ONLY WORRIED ABOUT being PREVENTED. Do not need to deal with the delay part.

But what if FDA decided to say pp is not bad …. This would go in a conclusion section.

Essence of contract has been prevented. So therefor 1511 is applicable

REBUTTAL: others have to be treated and still have follow up work to do

REBUTTAL to that: Dr. Richards sole purpose is to make pp available. Therefore it does not matter if there is follow up work to do.

Look hard at other side arguments.

Our analysis can track verski memo very closely.

It is probable the court will find sufficient evidence to allow Dr. Richards to get out of his contract with NutritionProcess.

• outline statute

In California, "The want of performance of an obligation … is excused … when such performance or offer is prevented or delayed … by the operation of law …." Ca. Civil Code § 1511. The code goes on to provide that this rule is still valid, even if there was a stipulation in the contract specifying the rule will not be used as an excuse.

Although there is a section in the contract which states the contract "is governed by the State of California and no change in laws … shall serve as an excuse for non-performance," this cannot be used as a reason to keep Dr. Richards in the contract. Section 1511 specifically bans against this type of clause: "[a contract may be excused] even though there may have been a stipulation that [this code] shall not be an excuse." This leaves Dr. Richards to show his situation falls within the remaining half of section 1511. He must demonstrate fulfillment of the contract has been prevented or delayed by operation of law. Sect. 1511.

• transition to the case
• state rule in Dorn case

If Section 1511 is to apply there must be prevention rather than delay. Dorn v Goetz. In February the FDA revoked the approval of Fen-phen and ordered it off the market. If there was reason to believe Phen-fen would be re-approved, it might be possible to say Dr. Richard’s work has been delayed. However, approval of Fen-phen has been revoked and should be considered permanent. Because of the permanent unavailability of Fen-phen there is no way Dr. Richards can continue to distribute it to NP’s patients. This is to say he has been prevented from distributing it because of recent FDA decisions.

In Dorn, the court held that the conveying and delivering of a home for purchase and sale was merely delayed and not prevented. Because the sale was only delayed, there was no basis on which to break the contract for the sale of the home. When the inability to perform is temporary it does not effect the essence of the contract. Dorn. Another reason the court felt that delay did not matter was because plaintiffs in the case were excusing the delay and wanted to carry out the sale.

The court failed to include the word "delay" in its opinion, when it cited the wording of Section 1511. The complete phrase reads "When such performance … is prevented or delayed … by the operation law." By specifically choosing to leave delay out of the quote, and later saying it is prevention rather than delay that counts, the court effectively rewrote the statute. Therefore, under 1511, when performance of contract is prevented by operation of law, the contract may be excused.

Dr. Richards performance was prevented by operation of law. As stated in the contract both parties agreed Dr. Richards would be "solely responsible" for the distribution of Fen-phen. This was stated in two separate sections of the contract. When the FDA revoked approval of the drug it was no longer possible for Dr. Richards to meet those requirements in the contract. As interpreted in Dorn, section 1511 is likely to apply in this situation because Dr. Richards actually was prevented by law from further distribution of Fen-phen.

NutritionProcess may argue that not all of the contract with Dr. Richards has been prevented by the FDA decision. The contract also stated Dr. Richards was to be available "for follow-ups with those NP customers who are prescribed these drugs." It may be possible to argue that the entirety of the contract has not been prevented. Patients that have already been prescribed the drug will need further consultations.

Another argument NP could raise is the fact that there never was a specified number of patients per month to be sent to Dr. Richards. Although his patients have dropped from an average of 600 to 30 patients last July, this is different than if NP was sending no patients.

To these few patients Dr. Richards has been distributing phentermine, which is an essential ingredient in Fen-phen. Because Dr. Richards is still able to distribute phentermine, NP may say his duties in the contract have not been fully prevented, as would be necessary under section 1511 if he is to get out of his contract. As 1511 is interpreted in Dorn, the essence of the contract must be delayed by an operation of law in order for it to be broken.

While NP may argue the essence of the contract actually has not prevented, this will be difficult to successfully do. The contract clearly stated the sole purpose was for the distribution of Fen-phen. The distribution of only one of these ingredients, phentermine, is not the same as the joint distribution of both the drugs. For these reasons, it is likely Dr. Richards will be able to break his contract with NP by "operation of law" as specified in section 1511 and interpreted by the court in Dorn.

• use Dorn to support my side
• say how 1511 was interpreted in Dorn
• tell how Dorn is similar to present case

Other side

• what other side may argue why Dorn is not applicable
• other arguments against my side

Sum up

• why court is likely to follow my interpretation
• why we have a likely case (in breif)

As stated in the contract both parties agreed Dr. Richards would be "solely responsible" for the distribution of Fen-phen. This was stated in two separate sections of the contract. When the FDA revoked approval of fenfluramine it was no longer possible for Dr. Richards to meet those requirements in the contract. As interpreted in Dorn, section 1511 is likely to apply in this situation because Dr. Richards actually is prevented by law from further distribution of Fen-phen.