Determining Contract Terms

Question 1

Parol Evidence Rule

Answer 1

Cannot provide extrensic evidence to supplement or contradict a written K, if it is a complete intergration.

Parol evidence bars evidence of:

(a) negotiations before K becomes integrated
(b) Agreements before K becomes integrated
(c) Exceptions, parol evidence allowed if partially integrated or additional terms would ordinarily be in a separate agreement.

Does not apply to or bar the admission of:

(a) Evidence of oral agreements made after the writing.
(b) Evidence of mistake when the oral agreement was reduced to writing.
(c) Evidence concerning a party’s defense based on misrep., fraud, or duress.
(d) Evidence used to resolve ambiguities about the meaning oaries intended to give particular terms in writing.

Question 2

Delivery and Risk of Loss

Answer 2

DELIVERY

(a) Shipment K’s- indiciated by FOB [seller’s city].
- Seller’s delivery obligation satisfied when seller: (1) delivers goods to common carrier. (2) makes reasonable arrangements for delivery. (3) notifies the buyer
- Once complete, risk of loss passes to the buyer.

(b) Destiantion K’s - anything not FOB [seller’s city].
- Seller’s delivery obligation is complete only when goods arrive at buyer’s location.

RISK OF LOSS

(a) Arises if goods are loss or destroyed at no fault of either party after K is formed but before goods are delivered.
(b) Factors determining risk of loss (in order of priority).
1. Prior agreement of the parties.
2. Breach - breaching party is liable for any unisured loss, even if unrelated to the breach.
3. Common carrier - risk shifts to buyer once seller completes delivery obligations.
4. Default - apply if the above factors are inapplicable. (i) Merchant seller risk of loss shifts to buyer once he takes physical possession of goods. (ii) Non-merchant seller risk of loss shifts tp buyer upon tendering delivery.

Question 3

Warranties of Quality

Answer 3

Express Warranty - Occurs when seller describes or promises facts about a product or its use. If product fails warranty is breached.

Implied Warranty of merchantability - Merchant warrants that goods are fit for their ordinary purpose, and occurs automatically when a MRECHANT sells goods. This can be disclaimed with very conspicous langauge.

Implied Warranty of Fitness for a particular use - Occurs when: 1) Buyer has particular purpose that, 2) seller is has reason to know of and 3) buyer relies on seller.

All warranties can be disclaimed with conspicous language such as “as is”. This limits remedies unless provision is unconscionable.