As noted in WA3, Kyle took your advice and decided not to spend the money to fig

Question

As noted in WA3, Kyle took your advice and decided not to spend the money to fight for his claim to “KFC.com” as the domain name for his new product line, Alabama’s Best Foods and reorganized the company as a LLC (limited liability company). Kyle, however, does want to continue the move of his business, Alabama Sunshine, to the next level of operations and he wants to complete the expansion by construct of a new store in Florala, AL. Recall that the property was owned by Sam; however, since Kyle’s business was so successful and people throughout Alabama and abutting States knew him and Alabama Sunshine, Kyle hired Angie to contact Sam, negotiate a price, and, if possible, buy Sam’s property, Kyle instructed Angie to not tell Sam that she was working for Kyle. Unfortunately, Angie realized that Sam’s property was an exceptionally good deal and bought the property for herself, not Kyle as agreed. Kyle has gotten over his anger and wants to move on with the construction of the new building on Greenacre (the Angie/Sam parcel of land).

Angie had acquired Greenacre in fee simple absolute and proposes to convey Greenacre to Kyle with a right of reverter (reversionary interest) as the location for Kyle's new store. The proposed conveyance would be a defeasible fee (fee simple defeasible) with the condition that, should Kyle fail to construct and open his store on Greenacre within 24 months or should Kyle cease to use Greenacre as a site for his store in the future, then Greenacre would revert back to Angie or her heirs. Angie also mentions that she does not want to transfer mineral rights to Kyle.

All this sounds pretty complicated to Kyle and he is growing nervous about this deal. His knowledge is in growing, processing, and marketing produce, not real estate transactions and land transfers. Knowing that you are (successfully) completing BL 240 and have studied land-use control and real property, Kyle turns to you for counsel. He is also concerned about any other problems that he should consider in this transaction or relating to the construction of the new business location. What are the legal issues and how would you advise Kyle? Kyle also mentions that a customer of United Nutrition Associates (UNA---recall WA2) is complaining that his holiday pack did not provide the health benefits that she would expect from organically grown produce. The family has filed a complaint with the federal government and is now threatening a lawsuit. Kyle wants to know what the legal issues are and how he should respond.

Explanation / Answer

Kyle may face the following legal isues:

1) Copyright or trademark infringemement for wrongly claiming the domain name provided it is already registered or is under consideration for some other business.

2) Any legal issues related to workforce, taxation and corporate restructuring post re-organizing his busines

3) Kyle needs to have had made ready client agent agrement and non disclosure agreement with Angie if he wants to take legal action.

4) Angie has her bases covered as reversionary interest will make sure that provided Kyle fails to use it to start his store, it goes back to Angie. Also, at the end of a lease period Angie as the freeholder will get it back for her own use. Kyle must make sure that conditions and duration of lease is favorable to him. Although this is a precaution by Angie, Kyle can go ahead and use it as he proposed.

5) Defeasible fee is fixed due to conditional transfer of land and Kyle should make sure he does not violate the conditions set initially or else he will not only loose any such fee but also the claim to use the land for his business.

6) Mineral rights clause further strenghens the point Angie wants to make as to the land not to be used for anything apart from as proposed by Kyle.

7) The health pack is believed not be any medicine or drug but nutritional product and hence the lawsuit can be challenged and squashed even in presence/absence of physical evidence for the same. Had any medicinal product been labeled as providing requisite nutrients, it would have been admissible.

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