Contracts CMR Modules 5-6

Question 1

What is an integration?

Answer 1

When the parties to a K express their agreement in a writing with the intent that it embody the final expression of their bargain, the writing is an integration.

Whether the writing is an “integration” depends on:

1. Whether the writing was intended as the final expression of the agreement; and
2. Whether the integration was intended to be complete or partial.

Evidence is admissible to show parties’ intent.

Question 2

What is the parol evidence rule?

Answer 2

Any expressions (written or oral) made prior to or contemporaneous with an integration (final writing) are inadmissible to vary the terms of the writing.

Question 3

Are additional terms permitted in a partial integration?

Answer 3

Yes. If an integration is partial, the writing may be supplemented by proving consistent additional terms (that is, the writing may not be contradicted).

Question 4

What is the effect of a merger clause?

Answer 4

A merger clause recites that the agreement is the complete agreement between the parties.

Question 5

Extrinsic evidence outside the scope of the parol evidence rule?

Answer 5

a. validity issues (party asserts agreement never came into being b/c formation defects i.e., fraud, duress, mistake, illegality; conditions precedent to effectiveness i.e. a party asserts there was an oral agreement that the written K would not become effective until a condition occurred).

b. collateral agreements and naturally omitted terms

c. interpretation

d. showing of “true consideration” (e.g., evidence that the consideration stated in the K was never paid)

e. reformation

f. subsequent modifications

g. add’l terms under Art. 2 [in a K for the sale of goods, a party may add consistent add’l terms unless (1) there’s a merger clause; or (2) the courts find writing was intended as a complete and exclusive statement of the terms.

Question 6

In a K for the sale of goods, how can the K’s written terms be explained or supplemented?

Answer 6

Article 2 provides that a written contract’s terms may be explained or supplemented by evidence of:

course of performance

course of dealing

usage of trade

… regardless of whether or not the writing appears to be ambiguous.

Question 7

What terms in the K determine Risk of Loss?

Answer 7

A contract’s delivery terms determine when risk of loss passes from the seller to the buyer if the goods are damaged or destroyed.

Question 8

What is the effect of breach on risk of loss?

Answer 8

If goods are defective and if the buyer has a right to reject the goods, ROL does not pass to the buyer until:

1. the defects are cured; OR
2. the buyer accepts the goods in spite of their defects.

If the buyer rightfully revokes acceptance, ROL is treated as having rested on the seller from the beginning to the extent of any deficiency in the buyer’s insurance coverage.

Question 9

When does Risk of Loss pass in a noncarrier case?

Answer 9

A noncarrier case = parties did not intend the goods would be moved by a common carrier (e.g., when you buy groceries)

If merchant seller –> ROL passes when buyer takes physical possession of the goods.

If nonmerchant seller –> ROL passes to the buyer upon tender of delivery.

Question 10

When does ROL pass in a carrier case?

Answer 10

A carrier case is a sale in which it appears the parties intended the goods to be moved by a carrier (when you order books from Amazon)

2 types of carrier cases = shipment contracts and destination contracts.