Chapter 9. The Scope Of Contractual Obligations (200-230) Flashcards
A, a tenant of B, promises to pay $1,000 for “such repairs as an architect appointed by B shall approve.” What are the conditions of A’s duty to pay for repairs?
The appointment by B of an architect and the architect’s approval of repairs are conditions of A’s duty to pay for repairs. Restatement 2d of Contracts § 226(a)
A and B agree that A will sell goods to B “f.o.b.” the place of destination. Prior correspondence shows that the price has been adjusted on the assumption that B’s insurance policies will cover the goods during shipment. Is this open to interpretation? What does this mean for B?
Notwithstanding the normal meaning of the “f.o.b.” term declared in Uniform Commercial Code § 2-319, it may be found that the parties have “otherwise agreed” under that section and that B bears the risk in transit. Restatement 2d of Contracts § 201(c)
A signs a negotiable promissory note payable to B’s order, and C signs his name on the back without more. Is this open to interpretation? What does this mean for C?
Under Uniform Commercial Code § 3-402, C’s signature is an indorsement, and evidence of a contrary understanding is not admissible except for the purpose of reformation of the instrument. This conclusion does not rest on interpretation of the writing. Restatement 2d of Contracts § 201(c)
A agrees to sell beer to B at a specified price per barrel. At the time of the agreement both parties and others in their trade use as standard barrels wooden barrels which originally hold 31 gallons and hold less as they continue in use. A statute defines a barrel as 311/2 gallons. Is this open to interpretation?
The statute does not prevent interpretation of the agreement as referring to the barrels in use. Restatement 2d of Contracts § 201(d)
A agrees to sell and B to buy a quantity of eviscerated “chicken.” A tenders “stewing chicken” or “fowl”. B rejects on the ground that the contract calls for “broilers” or “fryers.” Each party makes a claim for damages against the other. It is found that each acted in good faith and that neither had reason to know of the difference in meaning. Which interpretation, if any, is upheld? Who will prevail?
Both claims fail. Restatement 2d of Contracts § 201(d)
A orders goods from B, using A’s standard form. B acknowledges the order, using his own standard form. Each form provides that no terms are agreed to except those on the form and that the other party agrees to the form. One form contains an arbitration clause. the other does not. The goods are delivered and paid for. Later a dispute arises as to their quality. Is this open to interpretation? Is the arbitration clause to be enforced?
There is no agreement to arbitrate the dispute. Restatement 2d of Contracts § 201(d)
A contracts with B to do concrete work on a bridge, to be paid for according to “the number of square yards of concrete surface included in the bridge deck.” An estimate included in the proposal for bids and an estimate submitted by A to B after award are shown to have been based on the top surface only, not including the side and bottom surfaces. Is this open to interpretation? How is the contract to be interpreted?
On a finding that this was the mutual understanding, the contract is to be so interpreted. Restatement 2d of Contracts § 202(b)
In a written agreement between A and B it is stated that B owns half of the stock of C Company, that “A has rendered valuable services to C Company for which B desires to compensate A in the sum of $25,000 payable in the manner hereinafter set forth,” and that B will pay A “one-half of all money received from C Company, such as dividends, or profits until A has been paid the said amount of $25,000.” It is shown that the written agreement was executed after the services were rendered, that there was no prior explicit understanding that A would be compensated, and that before signing the written agreement A and B orally agreed that the $25,000 was to be a “bonus out of B’s profit,” “double or nothing,” “a gamble.” How is the agreement to be interpreted?
The written agreement is to be interpreted in accordance with the oral agreement. Restatement 2d of Contracts § 202(b)
A promises B as follows: “In consideration of your supplying my nephew C with china and earthenware during the coming year, I guarantee the payment of any bills you may draw on him on account thereof to the amount of $200.” C is engaged in the business of selling such goods. B sells C $2,000 of china during the year and draws bills for their price in varying amounts. C pays $1,000 and then defaults. How is A’s promise to be interpreted?
A’s promise is to be interpreted as a continuing undertaking, not limited to the first $200 of purchases. Restatement 2d of Contracts § 202(c)
A agrees with his divorced wife B and C, trustee, to pay to C $1,200 each year for the benefit of D, the 10-year-old son of A and B, until D enters college, and to pay $2,200 each year for the period of D’s higher education but not more than four years. At age 19 D completes high school and is inducted into the army. How is the agreement to be interpreted?
Upon a finding that the main purpose of the agreement is to provide for D’s maintenance and education, the agreement is to be interpreted as not requiring payments during D’s military service. Restatement 2d of Contracts § 202(c)
A written agreement between A and B for the exchange of real estate provides that A and B will each pay a $200 commission to C, a broker, “upon the signing of this agreement by both parties hereto.” The last sentence of the agreement states, “The commission being due and payable upon the transfer of the properties.” It is shown that A refused to sign the agreement until the last sentence was added. How is the agreement to be interpreted?
The agreement is to be interpreted to make the commission due only when both the signing and the transfer take place. Restatement 2d of Contracts § 202(d)
A agrees to appoint B exclusive distributor in a specified area for a new product to be manufactured by A, and B agrees to use his best efforts to promote sale of the product. The written agreement includes an initial retail price list and a provision that A will sell to B at the lowest price and highest discount it gives to any distributor. How is the agreement to be interpreted?
Whether the parties intend to be bound before any other distributor is appointed or any price fixed is a question of the meaning of the entire agreement in its context. If they do, the agreement has the effect of an agreement to sell at a reasonable price at the time for delivery. See Uniform Commercial Code § 2-305. Restatement 2d of Contracts § 202(d)
A contracts in writing to build a house for B according to specifications, and C, a surety company, guarantees A’s performance. After completion and acceptance the house and its contents are damaged by hot water because of defective work by the plumbing and heating subcontractor. How is the contract, specifications and surety bond to be interpreted?
In determining the responsibility of A and C, the contract, specifications and surety bond are to be read together. Restatement 2d of Contracts § 202(d)
A issues to B a fire insurance policy covering lumber stored in “sheds.” B also keeps lumber in the basement of a two-story warehouse. How is the coverage to be interpreted?
In the absence of contrary indication, lumber in the basement of a two-story warehouse is not covered. Restatement 2d of Contracts § 202(e)
A leases restaurant premises to B. The lease provides that A will pay for electricity and that B will “pay for gas or fuel used in the preparation of food.” Can the lease to be interpreted to include general electricity use by B on the restaurant premises?
In the absence of contrary indication, “fuel” should be read not to include electricity. Restatement 2d of Contracts § 202(f)
A leases restaurant premises to B. The lease provides that A will pay for electricity and that B will “pay for gas or fuel used in the preparation of food.” There is a local usage in the restaurant trade that “fuel” includes electricity used in cooking. How is the lease to be interpreted regarding the local usage?
In the absence of contrary indication, “fuel” may be read in accordance with the usage. But a provision in the lease that if B installs a new electric range he will also install a special meter and pay for electricity used by the range would show that the parties did not adopt the local usage. Restatement 2d of Contracts § 202(f)
A contract for the sale of horsemeat scraps calls for “minimum 50% protein.” As both parties know, by a usage of the business in which they are engaged, 49.5 per cent is treated as the equivalent of 50 per cent. How is the contract to be interpreted regarding the usage?
The contract is to be interpreted in accordance with the usage. Restatement 2d of Contracts § 202(f)
A discloses to B a secret formula for an antiseptic liquid and B agrees to pay monthly royalties based on amounts sold. Fifty years later the formula has been published in medical journals. After continuing to pay for 25 years more, B contends that the duty to pay royalties ended when the formula ceased to be secret. Does B still have a duty?
B’s conduct strongly negates the contention. Restatement 2d of Contracts § 202(g)
Several railroads agree in writing to share working expenses and taxes of X, another railroad, on a “wheelage basis.” For several years they pay shares in proportion to their stock ownership in the other railroad. Then all but one agree that they have been mistaken and that future payments will be made on a basis of use of X’s physical properties. How is the performance to be interpreted?
Stock ownership is so plainly unrelated to any possible meaning of “wheelage” that the course of performance does not support an interpretation of “wheelage basis” as requiring payments in proportion to stock ownership. Restatement 2d of Contracts § 202(g)
A licenses B to manufacture pipes under A’s patents, and B agrees to pay “a royalty of 50 cents per 1,000 feet for an output of 5,000,000 or less feet per year, and for an output of over 5,000,000 feet per year at the rate of 30 cents per thousand feet.” The 50 cent rate is payable on the first 5,000,000 feet, the 30 cent rate only on the excess. How is the agreement to be interpreted?
The more literal reading is unreasonable, since it would involve a smaller payment for 6,000,000 feet than for 4,000,000 feet. Restatement 2d of Contracts § 203(c)
A, an agent of C, authorized to make contracts for C, writes a letter to B beginning “We offer,” and stating a proposal in detailed and clear language, signed “C by A, Agent.” At the bottom of the office stationery which A uses for the offer there is printed “All contracts and orders taken are subject to the approval of the executive office.” A portion of the letter is typed over a portion of this printing. How might a jury find that there is an offer? Can this be set aside?
A jury’s finding that the printed words were not part of the letter and that it is therefore an offer will not be set aside. Restatement 2d of Contracts § 203(f)
A charter party contains the printed provision “vessel to have turn in loading.” There is written below this, “vessel to be loaded promptly.” What is the appropriate interpretation?
The printed and written provisions are given the consistent meaning that the vessel shall take its turn in loading, though this involves considerable delay, but when its turn arrives, the vessel shall be loaded promptly. Restatement 2d of Contracts § 203(f)
A’s agent B draws checks on the C bank, imprinting the amounts with perforations made by a check-writing machine. The amounts are also handwritten in figures. Does this open up the question of interpretation? Which should control: the perforation or the handwritten figures?
In case of conflict, since the perforated amounts are more difficult to alter, they control the handwritten figures. See Uniform Commercial Code § 3-118(b), (c). Restatement 2d of Contracts § 203(f)
A and his wife convey their ranch to A’s sister and her husband, reserving an option to repurchase. The parties agree orally that the property will be kept in the family, but the deed says nothing as to assignment of the option. How does partial integration or complete integration change the assignability of the option?
If the deed is found to be a partial integration, the oral agreement is effective to show that the option is not assignable. If the deed is found to be a complete integration, the oral agreement is discharged and the option is assignable. Restatement 2d of Contracts § 204(e)
A, an oil dealer, borrows $100,000 from B, a supplier, and agrees to buy all his requirements of certain oil products from B on stated terms until the debt is repaid. Before the debt is repaid, A makes a new arrangement with C, a competitor of B. Under the new arrangement A’s business is conducted by a corporation formed and owned by A and C and managed by A, and the corporation buys all its oil products from C. What may the new arrangement be found to be? Has the contract been breached?
The new arrangement may be found to be a subterfuge or evasion and a breach of contract by A. Restatement 2d of Contracts § 205(d)
A, owner of a shopping center, leases part of it to B, giving B the exclusive right to conduct a supermarket, the rent to be a percentage of B’s gross receipts. During the term of the lease A acquires adjoining land, expands the shopping center, and leases part of the adjoining land to C for a competing supermarket. Has the contract been breached?
Unless such action was contemplated or is otherwise justified, there is a breach of contract by A. Restatement 2d of Contracts § 205(d)
A Insurance Company insures B against legal liability for certain bodily injuries to third persons, with a limit of liability of $10,000 for an accident to any one person. The policy provides that A will defend any suit covered by it but may settle. C sues B on a claim covered by the policy and offers to settle for $9,500. A refuses to settle on the ground that the amount is excessive, and judgment is rendered against B for $20,000 after a trial defended by A. A then refuses to appeal, and offers to pay $10,000 only if B satisfies the judgment, impairing B’s opportunity to negotiate for settlement. B prosecutes an appeal, reasonably expending $7,500, and obtains dismissal of the claim. Is A liable? Why?
A has failed to deal fairly and in good faith with B and is liable for B’s appeal expense. Restatement 2d of Contracts § 205(d)
A and B contract that A will perform certain demolition work for B and pay B a specified sum for materials salvaged, the contract not to “become effective until” certain insurance policies “are in full force and effect.” A makes a good faith effort to obtain the insurance, but financial difficulty arising from injury to an employee of A on another job prevents A from obtaining them. Does A have a duty?
A’s duty to perform is discharged. Restatement 2d of Contracts § 205(d)
B submits and A accepts a bid to supply approximately 4000 tons of trap rock for an airport at a unit price. The parties execute a standard form of “Invitation, Bid, and Acceptance (Short Form Contract)” supplied by A, including typed terms “to be delivered to project as required,” “delivery to start immediately,” “cancellation by A may be effected at any time.” What does “good faith” require of A?
Good faith requires that A order and accept the rock within a reasonable time unless A has given B notice of intent to cancel. Restatement 2d of Contracts § 205(d)
A contracts to perform services for B for such compensation “as you, in your sole judgment, may decide is reasonable.” After A has performed the services, B refuses to make any determination of the value of the services. What, if anything, is A entitled to?
A is entitled to their value as determined by a court. Restatement 2d of Contracts § 205(d)
A suffers a loss of property covered by an insurance policy issued by B, and submits to B notice and proof of loss. The notice and proof fail to comply with requirements of the policy as to form and detail. B does not point out the defects, but remains silent and evasive, telling A broadly to perfect his claim. What recourse does A have regarding the policy?
The defects do not bar recovery on the policy. Restatement 2d of Contracts § 205(d)
A contracts to sell and ship goods to B on credit. The contract provides that, if B’s credit or financial responsibility becomes impaired or unsatisfactory to A, A may demand cash or security before making shipment and may cancel if the demand is not met. What recourse does A have?
A may properly demand cash or security only if he honestly believes, with reason, that the prospect of payment is impaired. Restatement 2d of Contracts § 205(e)
A contracts to sell and ship goods to B. On arrival B rejects the goods on the erroneous ground that delivery was late. Can B make further claims, e.g. damage to the goods?
B is thereafter precluded from asserting other unstated grounds then known to him which A could have cured if stated seasonably. Restatement 2d of Contracts § 205(e)
A is employed by B as an inventor. In an agreement settling their disputes on termination of the employment, A promises to assign to B all A’s rights in a pending patent application and all improvements on the invention covered. Thereafter A makes an invention and applies for a patent, and B claims it as an improvement. How is the agreement to be interpreted regarding future improvements?
The public interest in encouraging invention supports an interpretation of the agreement excluding future improvements unless future improvements were specifically included. Restatement 2d of Contracts § 207(a)
A, an individual, contracts in June to sell at a fixed price per ton to B, a large soup manufacturer, the carrots to be grown on A’s farm. The contract, written on B’s standard printed form, is obviously drawn to protect B’s interests and not A’s. it contains numerous provisions to protect B against various contingencies and none giving analogous protection to A. Each of the clauses can be read restrictively so that it is not unconscionable, but several can be read literally to give unrestricted discretion to B. In January, when the market price has risen above the contract price, A repudiates the contract, and B seeks specific performance. What might the court determine regarding specific performance?
In the absence of justification by evidence of commercial setting, purpose, or effect, the court may determine that the contract as a whole was unconscionable when made, and may then deny specific performance. Restatement 2d of Contracts § 208(c)
A, a homeowner, executes a standard printed form used by B, a merchant, agreeing to pay $1,700 for specified home improvements. A also executes a credit application asking for payment in 60 monthly installments but specifying no rate. Four days later A is informed that the credit application has been approved and is given a payment schedule calling for finance and insurance charges amounting to $800 in addition to the $1,700. Before B does any of the work, A repudiates the agreement, and B sues A for $800 damages, claiming that a commission of $800 was paid to B’s salesman in reliance on the agreement. What might the court determine regarding the claim?
The court may determine that the agreement was unconscionable when made, and may then dismiss the claim. Restatement 2d of Contracts § 208(c)
A, literate only in Spanish, is visited in his home by a salesman of refrigerator-freezers for B. They negotiate in Spanish. A tells the salesman he cannot afford to buy the appliance because his job will end in one week, and the salesman tells A that A will be paid numerous $25 commissions on sales to his friends. A signs a complex installment contract printed in English. The contract provides for a cash price of $900 plus a finance charge of $250. A defaults after paying $32, and B sues for the balance plus late charges and a 20% attorney’s fee authorized by the contract. The appliance cost B $350. What might the court determine regarding recovery for B?
The court may determine that the contract was unconscionable when made, and may then limit B’s recovery to a reasonable sum. Restatement 2d of Contracts § 208(d)
A, a packer, sells and ships 300 cases of canned catsup to B, a wholesale grocer. The contract provides, “All claims other than swells must be made within ten days from receipt of goods.” Six months later a government inspector, upon microscopic examination of samples, finds excessive mold in the cans and obtains a court order for destruction of the 270 remaining cases in B’s warehouse. What might the court determine regarding a claim for damages for breach of warranty?
In the absence of justifying evidence, the court may determine that the quoted clause is unconscionable as applied to latent defects and does not bar a claim for damages for breach of warranty by B against A. Restatement 2d of Contracts § 208(e)
A, a retail furniture store, sells furniture on installment credit to B, retaining a security interest. As A knows, B is a woman of limited education, separated from her husband, maintaining herself and seven children by means of $218 per month public assistance. After 13 purchases over a period of five years for a total of $1,200, B owes A $164. B then buys a stereo set for $514. Each contract contains a paragraph of some 800 words in extremely fine print, in the middle of which are the words “all payments … shall be credited pro rata on all outstanding … accounts.” The effect of this language is to keep a balance due on each item until all are paid for. On B’s default, A sues for possession of all the items sold. What might the court determine regarding the clause and/or contract?
It may be determined that either the quoted clause or the contract as a whole was unconscionable when made. Restatement 2d of Contracts § 208(e)
A, a corporation with its principal office in State X, contracts with B, a resident of State X, to make improvements on B’s home in State X. The contract is made on A’s standard printed form, which contains a clause by which the parties submit to the jurisdiction of a court in State Y, 200 miles away. No reason for the clause appears except to make litigation inconvenient and expensive for B. Is the clause unconscionable?
The clause is unconscionable. Restatement 2d of Contracts § 208(e)
A, a finance company, lends money to B, a manufacturing company, on the security of an assignment by B of its accounts receivable. The agreement provides for loans of 75% of the value of assigned accounts acceptable to A, and forbids B to dispose of or hypothecate any assets without A’s written consent. The agreed interest rate of 18% would be usurious but for a statute precluding a corporation from raising the defense of usury. Substantial advances are made, and the balance owed is $14,000 when B becomes bankrupt, three months after the first advance. Is the agreement unconscionable?
A determination that the agreement is unconscionable on its face, without regard to context, is error. The agreement is unconscionable only if it is not a reasonable commercial device in the light of all the circumstances when it was made. Restatement 2d of Contracts § 208(f)
A and B enter into an oral contract, and prepare and sign a writing to incorporate its terms. Though the writing contains substantially all the orally agreed terms, they are not fully satisfied with it, and they agree to have it redrafted. Is there an integrated agreement?
There is no integrated agreement. Restatement 2d of Contracts § 209(b)
A orally agrees to employ B on certain terms. B immediately writes and A receives a letter beginning, “Confirming our oral arrangement this morning,” and fully stating the contract as he understands it. A makes no reply but with knowledge of B’s understanding accepts services from B under the contract. Is there an integrated agreement?
The letter is a completely integrated agreement. Even though the letter is not in all respects accurate, it operates as an offer of substituted terms, and A’s acquiescence manifests assent to those terms. Restatement 2d of Contracts § 209(b)
A sells and delivers a hotel to B. Later A takes possession of the hotel furniture, and B sues to recover it. B claims the furniture under an oral agreement. A proves an apparently complete written agreement for the sale of the real property, and objects to consideration of the oral agreement. Is there an integrated agreement?
In the absence of contrary evidence, the writing is taken to be an integration. whether it is a complete integration is decided on the basis of all relevant evidence. If the oral agreement contradicts the writing, or if the writing is a complete integration, evidence of the oral agreement is excluded. otherwise the trier of fact is to decide whether the oral agreement was made. Restatement 2d of Contracts § 209(c)
A, a college, owns premises which have no toilet or plumbing facilities or heating equipment. In negotiating a lease to B for use of the premises as a radio station, A orally agrees to permit the use of facilities in an adjacent building and to provide heat. The parties subsequently execute a written lease agreement which makes no mention of facilities or heat. How is the existence of an integrated agreement be determined?
The question whether the written lease was adopted as a completely integrated agreement is to be decided on the basis of all relevant evidence of the prior and contemporaneous conduct and language of the parties. Restatement 2d of Contracts § 210(b)
A writes to B a letter offer containing four provisions. B replies by letter that three of the provisions are satisfactory, but makes a counter proposal as to the fourth. After further discussion of the fourth provision, the parties come to oral agreement on a revision of it, but make no further statements as to the other three terms. Is there an integrated agreement?
A’s letter is a partially integrated agreement with respect to the first three provisions. Restatement 2d of Contracts § 210(c)
A delivers a fur coat to B for storage and receives a warehouse receipt which purports on its face to set forth the terms of the storage contract. Has A assented to the terms of the contract?
By accepting the receipt, whether or not A reads it or understands it, A assents to its terms. Restatement 2d of Contracts § 211(d)
A pays ten cents and checks a parcel in a parcel room in a bus terminal, and receives a parcel check three inches long and two and one-half inches wide. The check bears an identifying number and the word “contract,” both conspicuous, and contractual terms in fine print, but A does not read it or know of the terms until later. Are the terms part of the checking agreement?
The terms are not part of the checking agreement. Restatement 2d of Contracts § 211(d)
A sells plant bulbs to B. Later A delivers the bulbs with an invoice containing contractual language. B writes on a copy of the invoice “picked up October 27th” and signs his name. Are the terms part of the checking contract?
The invoice terms are not part of the contract. Restatement 2d of Contracts § 211(d)
A, an insurance company, issues an insurance policy to B covering injuries “by accidental means.” A clause in the policy excludes “disability or other loss resulting from or contributed to by any disease or ailment.” B believes himself to be in good health, but has a latent Parkinson’s disease. Later an accidental blow activates the disease into a disabling condition. Is the policy enforceable?
B is covered by the policy without regard to his knowledge or understanding of the quoted language at the time of contracting. Restatement 2d of Contracts § 211(e)
A applies to B, an insurance company, for burglary insurance. B issues to A a written binder by which B “agrees to insure property as herein described for amounts subscribed” until a policy is issued. The policy in ordinary use by B includes a provision for cancellation by B on written notice and requires suit within one year after loss. Are the terms part of the contract?
Those terms are part of the contract. Restatement 2d of Contracts § 211(f)
A ships goods via B, a carrier. B carries an insurance policy with C, an insurance company, and with C’s authority issues to A a certificate that A’s shipment is insured under the policy. The policy contains a clause excluding coverage of trips on the Great Lakes unless approved by D, an individual, but this clause is not referred to in the certificate or known to A. Are the terms part of the contract?
It is not part of the contract between A and C. Restatement 2d of Contracts § 211(f)
A sends to B an invitation to bid on ship repairs. Annexed to the invitation are contract terms, including a promise by B to save A harmless from certain claims. B’s bid has printed at the top, in print which cannot be read without a magnifying glass, a clause negating liability for personal injuries beyond that imposed by law. A accepts the bid. Does the clause negate B’s obligation to save A?
The clause in the bid is ineffective to negate B’s obligation to save A harmless. Restatement 2d of Contracts § 211(f)
A sells an electric generator to B by a written contract incorporating typewritten specifications and printed standard terms. The specifications include “1136 kilowatts,” and the standard terms disclaim any warranties not set forth in the documents. Does the disclaimer impair the warranty that the generator will produce 1136 kilowatts?
The disclaimer does not impair A’s warranty that the generator will produce 1136 kilowatts. See Uniform Commercial Code § 2-316(1). Restatement 2d of Contracts § 211(f)
In an integrated agreement A promises to sell and B to buy described real estate. A intends to sell Blackacre. B intends to buy Whiteacre. The writing reasonably describes Greenacre, and neither party has any more reason than the other to know of the misdescription. Is there a contract?
There is no contract. Restatement 2d of Contracts § 212(a)
In an integrated agreement A agrees to sell and B to buy certain patent rights. A intends to sell only the rights under the British patent on a certain invention. B intends also to buy rights under American and French patents. How is the agreement to be interpreted?
If A has reason to know that B intends to buy the American rights, B has reason to know that A does not intend to sell the French rights, and the language used can be read to cover the British and American but not the French rights, that may be determined to be the proper interpretation. Restatement 2d of Contracts § 212(a)
A agrees orally with B, a stockbroker, that in transactions between them “abracadabra” shall mean X Company. A sends a signed written order to B to buy 100 shares “abracadabra,” and B buys 100 shares of X Company. Is this binding?
The parties are bound in accordance with the oral agreement. Restatement 2d of Contracts § 212(b)
A and B are engaged in buying and selling shares of stock from each other, and agree orally to conceal the nature of their dealings by using the word “sell” to mean “buy” and using the word “buy” to mean “sell.” A sends a written offer to B to “sell” certain shares, and B accepts. Is this binding?
The parties are bound in accordance with the oral agreement. Restatement 2d of Contracts § 212(b)
In an integrated agreement A promises B to insert B’s “business card” in A’s “advertising chart” for a price to be paid when the chart is “published.” How are the terms to be interpreted?
The quoted terms are to be read in the light of the circumstances known to the parties, including their oral statements as to their meaning. Restatement 2d of Contracts § 212(c)
In an integrated agreement A contracts to sell “my horse,” and B contracts to buy it. A owns two horses. How is the agreement to be interpreted?
It may be shown by oral evidence, including statements of the parties, that both A and B meant the same horse. Restatement 2d of Contracts § 212(c)
D Corporation regularly borrows money from C Bank. S, the principal stockholder in D, offers to guarantee payment if C will increase the amounts lent. There is a bank custom to make such loans only on adequate collateral supplied by the borrower, and C promises S to follow the custom. S then executes a written agreement with C guaranteeing payment of future loans to D “with or without security.” How might C’s prior promise be discharged?
If the written agreement is a binding integrated agreement, C’s prior promise is discharged. Restatement 2d of Contracts § 213(b)
A orally agrees to sell a city lot to B. The city is installing a sidewalk in front of the lot, and A orally agrees to pay the cost to be assessed by the city in an amount not exceeding $45. B then retains a lawyer to draw up a written agreement, and A and B execute it, A without reading it. The agreement provides that A will pay all costs of the installation of the sidewalk, but does not mention any dollar limit. How might the agreement for a $45 limit be discharged?
If the written agreement is a binding integrated agreement, any agreement for a $45 limit is discharged. Restatement 2d of Contracts § 213(b)
In May A and B exchange properties and agree orally that A will make certain repairs on the property to be conveyed by A to B, the repairs to be finished by October 1. A and B then draw up and sign a memorandum of the repair agreement, specifying all the terms except that the memorandum is silent as to time of performance. How might the agreement to finish by October 1 be discharged?
If the memorandum is a binding completely integrated agreement, the agreement to finish by October 1 is discharged, and the repairs are to be finished within a reasonable time. The oral agreement as to October 1 may be relevant evidence as to what is a reasonable time. Restatement 2d of Contracts § 213(c)
A and B make an oral agreement for the sale of land and a hotel thereon, together with the hotel furniture. They employ a lawyer to prepare a written contract. He does so, and they sign it. It contains no mention of personal property. How might the agreement as to furniture be discharged?
The agreement as to furniture is discharged if there is a binding completely integrated agreement covering the entire transaction, but not if only the part of the agreement relating to real property is integrated. Restatement 2d of Contracts § 213(c)
A and B enter into a contract that B will build a house on A’s land for a price. Later they enter into an oral contract by which B promises to add a porch and A promises to pay an extra $2,000. Still later they enter into an integrated agreement in which B promises to build according to the original plans and A promises to pay the extra $2,000. Is the integrated agreement binding? Is there consideration? Can the oral agreement be discharged?
The integrated agreement is not binding for lack of consideration, and the oral intermediate agreement is not discharged. Restatement 2d of Contracts § 213(d)
A and B enter into a contract that B will build a house on A’s land for a price. Later B offers to add a porch if A will sign a new contract. They then enter into an integrated agreement in which B promises to build according to the original plans and A promises to pay an extra $2,000. How might the integrated agreement discharge the matter of the porch? Is there consideration?
If the integrated agreement is inconsistent with the porch offer, or if it is a completely integrated agreement and the matter of the porch is within its scope, the integrated agreement is effective to discharge the porch offer but is not binding for lack of consideration. Restatement 2d of Contracts § 213(d)
A and B in an integrated contract agree that A shall serve as captain of B’s ship, and shall have a certain rate of pay instead of “privilege and primage.” What would be used to show that the meaning to the parties of the quoted words when used was the privilege of transporting goods in the captain’s cabin establish that as the meaning in the contract?
Previous negotiations showing that the meaning to the parties of the quoted words when used was the privilege of transporting goods in the captain’s cabin establish that as the meaning in the contract. Restatement 2d of Contracts § 214(b)
In an integrated contract with A, B promises to buy “your wool.” Previous negotiations of the parties related to both wool from A’s sheep and wool that A had contracted to buy from other persons. Are the negotiations admissible in court? Why?
The negotiations are admissible to establish both classes as the meaning of the words “your wool” in the contract. Restatement 2d of Contracts § 214(b)