contract interpretation Flashcards
what are the two traditional view Restatements approaches to ambiguity of terms in contract?
subjective (what do each of the parties THINK the terms mean?) and objective (what would a reasonable person think it means?)
describe the subjective traditional Restatement view of ambiguity
what do each of the parties THINK the term means?
describe the objective traditional Restatement view of ambiguity
what would a reasonable person think the ambiguous term means?
what’s the Restatements Modern View of ambiguity?
modified objective (Corbin’s view)
describe the modified objective (Corbin) view of ambiguity
Restatements Modern view - (1) who controls the contract, and (2) what did the controlling party mean by the term?
under the modified objective approach to ambiguity, what if both parties attach the same meaning to a term?
parties’ shared meaning controls
under the modified objective approach to ambiguity, what if both parties attach different meanings to a material term?
no contract exists - lack of mutual assent
under the modified objective approach to ambiguity, what is superior knowledge?
one party knows or has reason to know of the meaning attached to a material term by the other party
what happens in the case of superior knowledge under the modified objective approach to ambiguity?
the innocent party’s meaning controls, in order to enforce good faith and fair dealing
what is parol evidence, defined?
external oral or written evidence of prior or contemporaneous agreements
what does the parol evidence rule do?
operates to EXCLUDE evidence of prior or contemporaneous agreements
what 3 kinds of evidence are always allowed in, despite the parol evidence rule?
trade usage, course of performance, course of dealing
what are the three types of contract integration for purposes of parol evidence?
fully integrated, partially integrated, completely unintegrated
how much parol evidence is allowed for a fully integrated contract?
none - contract is complete
what kind of parol evidence is allowed in a partially integrated contract?
PE allowed to explain or supplement terms already in contract - can’t contradict what’s already existing
how much parol evidence is allowed for a completely unintegrated conract?
PE allowed liberally, since there is not enough to guide the court in interpreting the contract
how is parol evidence applied under CISG?
it’s not applicable - can testify to anything regarding the agreement
define “trade usage” in terms of parol evidence
established/recognized customs and standards for the field or industry, at the time the contract was entered into
define “course of performance” in terms of parol evidence
how have you been performing under this current contract up until now? how has this issue been dealt with so far?
define “course of dealing” in terms of parol evidence
how have the parties dealt with OTHER contracts or OTHER transactions of this type - not under this current contract, but under ones in the past with the same parties
what is the role of the merger clause?
excludes all parol evidence - language says that “no changes shall be valid unless reduced to writing and signed by the parties” - merges all prior or contemporaneous negotiations
what are the two methods of determining the level of integration?
traditional “four corners” view and modern “permissive approach”
describe the traditional “four corners” method of determining integration
focus on written contract terms within the “four corners” of the piece of paper
describe the modern, “permissive” view of determining the level of contract integration
focus on party intent/context - reviews relevant external evidence of party intent
what are the five exceptions to the parol evidence exclusion rules?
(1) evidence to establish invalidation (fraud, duress), (2) establishment of collateral agreement, (3) subsequent oral/written modification, (4) oral condition precedent to contract, (5) mistake in integration (clerical)
