Determining Terms Flashcards
UCC Risk of Loss - 3rd Party Carrier
Under the UCC, the risk of loss generally passes to the buyer when the buyer receives the goods.
But if the contract requires the seller to deliver the goods by third-party carrier, then the risk of loss passes to the buyer at different times depending on whether the contract is a:
- shipment contract – does not require delivery at a particular location, so the risk of loss passes to the buyer when the goods are properly delivered to the carrier or
- destination contract – requires delivery at a particular location, so the risk of loss passes to the buyer when goods are delivered at the named location.
Destination Ks
Destination contracts are often identified by the letters “F.O.B.” (free on board) followed by a location.
What is a release?
A release is a writing that manifests an intent to discharge another party from an existing duty.
The UCC requires the release to be signed by the releasing party, but new consideration is not required for the release to be effective.
PER bars evidence of:
Exceptions?
- Evidence that is extrinsic to a written K is inadmissible to supplement or contradict K
- Negotiations and agreements before K becomes integrated
Exceptions: EE may be allowed if either:
- K was only partially integrated; OR
- Additional terms would ordinarily be in a separate agreement.
PER Exceptions: allows evidence of:
1) Mistake in the process of reducing an agreement to writing
2) Misrepresentation, fraud, duress, or illegality
3) Unconscionability (i.e., K involves some element of unfair surprise)
3) Condition precedent to agreement becoming effective
4) Modifications (oral or written) made after the writing
5) Meaning parties intended to give particular terms in the writing
6) UCC: a written K’s terms may be explained or supplements by evidence of a course of dealing, performance, or trade usage (can be used to show parties’ customs take precedence over an industry’s customs of trade)
PER - UCC Partially integrated K
The UCC presumes that a written contract is partially integrated. As a result, evidence that supplements the written contract is admissible—but evidence that contradicts the writing is inadmissible—under the parol evidence rule.
Example: A written agreement between the jeweler and the goldsmith is partially integrated because it represents the parties’ final agreement for the sale of a ring—including the price, size, and type of gold. This writing expressly stated that the ring would be chosen only from the white gold ring designs. The goldsmith’s prior oral statement that he would also include rose gold ring designs contradicts the writing, so the court should not admit this evidence
In contrast, the writing made no mention of earrings. This means that the goldsmith’s prior oral statement to include a set of earring settings merely supplements the writing and is not barred by the parol evidence rule. As a result, the court should admit the evidence as to the earring settings.
Title and Good Faith Purchasers - Buyer in the ordinary course
A merchant entrusted with goods has the power to convey good title to a buyer in the ordinary course.
A buyer in the ordinary course is someone who buys goods:
(1) in good faith,
(2) without knowledge that the sale violates the owner’s rights to the goods, AND
(3) from a merchant in the business of selling goods of that kind.
PER - UCC - Trade Usage
Regular practice or method of dealing in that particular business/industry
Under the UCC, a party may explain or supplement the terms of a written contract with evidence of trade usage—i.e., any practice or method of dealing in the particular business or industry that is observed with such regularity so as to justify an expectation that it will be observed in the instant case.
PER - UCC - Course of Performance
Evidence of COP is admissible. Under the UCC parol evidence rule, course of performance can be used to supplement or explain the terms of a final written agreement.
COP = Sequence of conduct under contract involving repeated occasions for performance.
Course of performance > course of dealing & trade usage
PER - UCC - Course of Dealing
Admissible
Sequence of conduct pertaining to previous contracts.
Course of dealing > trade usage
PER - Evidence of Condition Precedent
Evidence used to establish a condition precedent that must occur before a contract becomes effective is admissible under an exception to the parol evidence rule.
Implied Warranty of Merchantability
The implied warranty of merchantability warrants that the goods sold are fit for their ordinary purpose, but this warranty is implied only when the seller is a merchant with respect to the goods sold.
Under the UCC, is a K presumed to be partially integrated or totally integrated?
Partially integrated.
However, that presumption goes away when the writing contains a merger clause—i.e., a clause that declares the written contract to be the complete and final agreement between the parties. The written contract will instead be deemed completely integrated.
A written K is completely integrated if it contains a _______________.
A written contract is completely integrated if it contains a merger clause—i.e., a clause that declares the written contract to be the complete and final agreement between the parties.
As a result, the parol evidence rule bars the admission of prior or contemporaneous agreements that modify or contradict the terms of the writing.
Installment K - UCC
Under the UCC, an installment contract is defined as a contract in which the goods are to be delivered in multiple shipments, and each shipment is to be separately accepted by the buyer.
Payment by the buyer is due upon each delivery unless the price cannot be apportioned.
