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Contracts > Determining Terms > Flashcards

Determining Terms Flashcards

1
Q

generally, what is an “integration”?

A

a writing that is intended by the parties to be the final expression of their bargained for agreement

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2
Q

what is the parol evidence rule?

A

any extrinsic evidence of written/oral expressions made prior to the integration OR oral expressions contemporaneous to the integration are INADMISSIBLE to vary the terms of the K

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3
Q

true or false: the parol evidence rule is a BACKWARDS looking rule.

A

TRUE (looks only at prior writings or prior/contemporaneous oral expressions – NOT future evidence)

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4
Q

what are the two compenents of determining when a writing is an integration?

A

1) whether the writing was intended as the final expression of the agreement, and
2) whether it was intended to be a complete or partial integration

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5
Q

true or false: prior/contemporaneous expressions are admissible to prove a party’s intent.

A

TRUE

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6
Q

if an integration is COMPLETE, what is the effect on contradictory and additional terms?

A

NEITHER contradictory nor additional terms are permitted (integration cannot be supplemented/contradicted by them)

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7
Q

if an integration is PARTIAL, what is the effect on contradictory and additional terms?

A

contradictory terms = NOT allowed
additional, consistent terms = ALLOWED to supplement integration

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8
Q

true or false: the UCC assumes all integrations are COMPLETE.

A

FALSE (UCC assumes all integrations are PARTIAL – can be supplemented by consistent additional terms)

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9
Q

what is a merger clause?

A

a clause in a K that states that the agreement is the complete agreement between the parties

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10
Q

under the modern majority view, what is the effect of a merger clause on an integration?

A

viewed as a factor in determining integration (not conclusive)
**NOTE = merger clauses are usually held to be conclusive in large commercial contracts

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11
Q

true or false: extrinsic evidence offered to attack an agreement’s validity IS admissible (not within the parol evidence rule).

A

TRUE (ie – formation defects, establishing conditions precedent to effectiveness)
**RATIONALE = party agrees/concedes that the writing reflects the agreement but asserts that the agreement never actually came into being because of some fundamental issue

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12
Q

true or false: extrinsic evidence of an oral agreement stating that the written K would not become effective until a condition occurred IS admissible (outside the parol evidence rule).

A

TRUE (this is a validity issue = conditions precedent to effectiveness)

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13
Q

true or false: parol evidence IS admissible if the parol agreement is COLLATERAL to the written obligation.

A

TRUE

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14
Q

when is a parol agreement merely “COLLATERAL” to an integration?

A

when it is related to the subject matter of the agreement but NOT a part of the primary promise (and does not conflict with it)

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15
Q

what is the Rstmt doctrine of “naturally omitted terms”?

A

doctrine that allows extrinsic evidence of terms that would naturally be omitted from the integration
**NOTE = similar to a parol agreement that’s “collateral”

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16
Q

when would a term be “naturally omitted”?

A

if it…
1) does not conflict with the written integration, and
2) concerns a subject that similarly situated parties would not ordinarly be expected to include in the written integration

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17
Q

true or false: parol evidence may be admitted to help reach a correct interpretation of a vague or ambiguous term in the K.

A

TRUE

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18
Q

true or false: parol evidence may be admitted to help reach a correct interpretation of a clear term in the K.

A

FALSE (only admissible to interpret vague/ambiguous terms)

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19
Q

true or false: the parol evidence rule will bar extrinsic evidence showing the “true consideration” paid.

A

FALSE (this evidence is admissible under the parol evidence rule)
**EX = evidence admitted to show that the consideration agreed to in the K was never paid

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19
Q

true or false: the parol evidence rule bars/applies to evidence/facts alleged by a party seeking to reform the agreement (ie – mistake).

A

FALSE (parol evidence rule will NOT bar this kind of evidence)

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20
Q

true or false: parol evidence CAN be offered to show subsequent modifications to a written K.

A

TRUE (parol evidence rule is BACKWARDS looking, won’t bar subsequent mods)

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21
Q

in what 2 situations will UCC article 2 NOT permit consistent additional terms? (no longer presume integration is partial)

A

a party may add consistent additional terms unless:
1) there is a merger clause, or
2) courts find from all circumstances that the writing was intended as a complete and exclusive statement of the agreement

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22
Q

regardless of whether K’s terms are ambiguous, UCC article 2 provides that a written integration may be explained/supplemented by what kinds of evidence other than parol agreements/expressions? (3)

A

evidence of…
- course of performance
- course of dealing
- usage of trade

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23
Q

what is the heirarchy/process of looking at evidence when interpreting a K? (4)

A

(1) express terms in the K are given greater weight than
(2) the parties’ course of performance which are given greater weight than (3) the parties’ course of dealing which are given greater weight than (4) the usage of trade
**NOTE = applies to both UCC and common law

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24
Q

what do we mean by the parties’ “course of performance”?

A

if a contract (1) involves repeated occasions for performance by either party and (2) the other party has an opportunity to object to such performance, any course of performance accepted or acquiesced to is relevant in determining the meaning of the K

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25
Q

what do we mean by “course of dealing”?

A

a sequence of conduct concerning previous transactions between the parties to the particular transaction that may be regarded as establishing a common basis of their understanding
TLDR = look to prior Ks between them to help define/interpret the current terms

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26
Q

what do we mean by “usage of trade”?

A

a practice/method of dealing regularly observed in a particular business setting to justify an expectation that it will be followed in the particular transaction

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27
Q

true or false: course of performance looks at performance under the SAME contract.

A

TRUE (only look at diff K when looking at course of dealing)

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28
Q

true or false: generally, UCC article 2 will use gap filler provisions for missing terms in a K.

A

TRUE

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29
Q

what missing term will the UCC article 2 gap fillers NOT fill in?

A

the quantity term

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30
Q

what is the UCC “price” gap filler?

A

a reasonable price at the time for delivery

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31
Q

when will the UCC price gap filler apply? (3 situations)

A

1) nothing is said as to price
2) price is left open TBD by the parties but they’ve failed to agree, or
3) price is fixed based on a standard set by 3d party/agency but the standard is not set

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32
Q

what is the UCC gap filler for place of delivery?

A

the seller’s place of business (or if no place of business, seller’s home)

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33
Q

what is the UCC gap filler for shipment/delivery time?

A

due within a reasonable time

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34
Q

what is the UCC gap filler for time/place of payment?

A

time and place at which the buyer is to receive the goods

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35
Q

what is the UCC gap filler for who selects an “assortment”? (ie - shirts in various colors)

A

assortment is at the buyer’s option

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36
Q

generally, what warranty do Ks for sale of goods automatically include?

A

warranty of title

37
Q

what will create an express warranty in a sale of goods K/transaction? (2 rqmts)

A

(1) any affirmation of fact or promise by the seller to the buyer, description of the goods, or sample/model (any one works)
2) that is part of the the basis of the bargain

38
Q

true or false: a seller’s opinion (if part of the basis of the bargain) can create an express warranty.

A

FALSE (not a fact or promise)

39
Q

what must a buyer show to prove that the statement/description/model/etc was “part of the basis of the bargain”?

A

only that the statement/etc came at such a time that the buyer could have relied on it when they entered into the K (DON’T have to show that they did in fact rely!)

40
Q

what 2 warranties are implied by law in every sale of goods K by a merchant that regularly deals in goods of the kind sold?

A

1) implied warranty of merchantability
2) implied warranty against infringement

41
Q

what is the implied warranty of merchantablity?

A

promise that the goods are fit for the ordinary (foreseeable) purpose for which such goods are used

42
Q

true or false: for breach of the warranty of merchantability, seller’s awareness of a good’s defect is relevant to their liability for that defect (ie – negligence)

A

FALSE (implied warranty of merchantability is based on ABSOLUTE liability – knowledge/likelihood not required)

43
Q

when will a warranty of fitness for a particular purpose be implied in a sale of goods K? (2 elements)

A

implied if…
1) any seller (merchant or not) has reason to know BOTH: the particular purpose for which the goods are being used & the buyer is relying on the seller’s skill and judgment to select suitable goods, AND
2) the buyer in fact relies on the seller’s skill and judgment

44
Q

what does a seller promise via a warranty of title? (3 promises)

A

warrants that…
1) the title is good
2) transfer is rightful
3) there are no liens/encumbrances against the title of which the buyer is unaware at the time of contracting

45
Q

what does a merchant seller promise via the warranty against infringement?

A

warrants that goods are delivered free of any patent, trademark, copyright, or similar claims

46
Q

true or false: a buyer who gives specifications to the seller for the goods CAN recover under the warranty against infringement if a patent/trademark suit arises.

A

FALSE (seller not liable in this situation)

47
Q

how can a seller disclaim the warranty of title?

A

only by specific language/circumstances that give the buyer notice that seller does not claim title or that they are selling only such rights as they/3d party have

48
Q

true or false: a seller can disclaim express warranties.

A

FALSE

49
Q

how can the implied warranty of merchantability be specifically disclaimed/modified?

A

only by specifically mentioning merchantability
**NOTE = if K in writing, disclaimer must be conspicuous (OBVIOUS)

50
Q

how can the implied warranty of fitness for a particular purpose be specifically disclaimed?

A

only by a conspicuous writing
**EX = “there are no warranties which extend beyond the description on the face hereof”

51
Q

when is a term “conspicuous”?

A

when it is written, displayed, or presented in such a way that a reasonable person ought to have noticed it

52
Q

when is language in the body of a writing “conspicuous”? (3 situations)

A

conspicuous if…
1) it’s in larger type than the surrounding text,
2) it’s in a contrasting type, font, or color, or
3) it’s set off from the text by marks that call attention to it

53
Q

true or false: the jury decides whether a writing/term is conspicuous for disclaimer purposes.

A

FALSE (the JUDGE decides issues of conspicuousness)

54
Q

how can implied warranties be generally disclaimed? (3 ways)

A

1) by “as is” or similar language,
2) by examination or refusal to examine
3) by course of dealing, course of performance, or usage of trade

55
Q

can implied warranties be generally disclaimed by “as is” language?

A

YES so long as the expression calls the buyer’s attention to the fact that there are no implied warranties
**NOTE = need not be conspicuous, BUT a hidden or fine print disclaimer will NOT be effective

56
Q

when are implied warranties generally disclaimed by buyer’s examination/refusal to examine?

A

warranties as to defects that a reasonable examination would have revealed are disclaimed when, before entering into K, the buyer has examined the goods or samples as fully as they desire OR refuse to examine

57
Q

true or false: implied warranties may be disclaimed by course of dealing, course of performcance, or usage of trade.

A

TRUE

58
Q

generally, may a party include a clause in the K that limits the damages available for breach of warranty?

A

YES

59
Q

when may a party NOT limit damages for breach of warranty in a K?

A

when such limitation is unconscionable

60
Q

how do courts regard warranty disclaimers that limit damages for personal injury caused by a breach of warranty on consumer goods?

A

courts consider this to be prima facie evidence of unconscionability

61
Q

to be effective, when must disclaimers be agreed upon?

A

during the bargaining process

62
Q

true or false: warranty disclaimers or limitations included on the inside of a good’s package IS effective against the buyer.

A

FALSE

63
Q

generally, how are damages for a breach of warranty measured?

A

the difference between the value of the goods accepted and the value of the goods as warranted (measured at the time and place of acceptance)

64
Q

true or false: disclaimers and limitations in clickwrap of a software installation ARE effective against the buyer.

A

TRUE

65
Q

what are a buyer’s options when the warranty of title has been breached? (good reclaimed by true owner)

A

1) rescind the K
2) revoke acceptance of the goods, or
3) sue for damages

66
Q

what important fact do delivery terms in a sale of goods K determine?

A

they determine when the risk of loss passes from the seller to the buyer (if the goods are damaged/destroyed)

66
Q

how are damages measured for breach of warranty of title?

A

measured by the value of the goods as warranted (usually the same as the purchase price)

67
Q

when the buyer has a right to reject the goods (goods defective), when does the risk of loss pass to the buyer? (2 options)

A

when either:
1) the goods’ defects are cured, or
2) the buyer accepts the goods despite the defects

68
Q

when the buyer rightfully revokes acceptance, what is the effect on risk of loss?

A

the risk of loss is treated as having rested on the seller from the beginning (to the extent of any deficiency in the buyer’s insurance coverage)

69
Q

what is the effect of breach on risk of loss? (who bears the risk?)

A

the breaching party bears the risk of loss (even if the breach is unrelated)

70
Q

what is a noncarrier case?

A

a sale in which it appears that the parties did NOT intend that the goods be moved by a common carrier (ie – buying groceries)

71
Q

when does risk of loss pass to the buyer in noncarrier cases in which the seller is a MERCHANT?

A

only when they physical possession of the goods

72
Q

when does risk of loss pass to the buyer in noncarrier cases when the seller is NOT a merchant?

A

upon tender of delivery (when goods are made available)
**EX = seller tells buyer where goods are located/how to pick it up

73
Q

what is a carrier case?

A

sale in which it appears that the parties intended the goods to be moved by a carrier (ie – ordering books from a website)

74
Q

what are the two types of carrier cases?

A

1) shipment contracts
2) destination contracts

75
Q

who bears the risk of loss when the seller ships nonconforming goods?

A

the seller

76
Q

what is a shipment contract?

A

a contract that requires the seller to ship the goods by the carrier but does NOT require them to deliver the goods at a particular destination

77
Q

when does risk of loss pass to the buyer in a shipment contract?

A

passes when goods are delivered to the carrier

78
Q

what type of carrier K is presumed under the UCC?

A

shipment K

79
Q

what are a seller’s duties to the buyer under a shipment K? (4)

A

seller must:
1) make a reasonable contract with the carrier on behalf of the buyer
2) deliver the goods to the carrier
3) promptly notify the buyer of the shipment
4) provide buyer with any docs needed to take possession of goods

80
Q

what is a destination K?

A

a contract that requires the seller to deliver goods at a particular destination

81
Q

when does the risk of loss pass to the buyer in a destination K?

A

when the goods are tendered to the buyer at the destination

82
Q

what is “FOB” and what is its effect on risk of loss?

A

FOB = “free on board” (followed by a location)
risk of loss impact = passes to buyer at the named location (seller bears risk/expense of getting goods to that location)
**NOTE = FOB can apply to either shipment or destination contracts depending on the location named

83
Q

what is “FAS” and what is its effect on risk of loss?

A

FAS = “free alongside” (used when goods are shipped to a boat)
risk of loss impact = passes to buyer when goods are delivered to the dock

84
Q

what is a sale or return K?

A

K where buyer takes goods for resale but* may return them* if unable to resell

85
Q

what is the effect on risk of loss in a sale or return K where buyer returns goods?

A

risk remains on buyer while goods are in transit

86
Q

what is a sale on approval K?

A

K where buyer takes goods for trial period and may return them even though they conform to the K

87
Q

when does risk of loss pass to buyer in a sale on approval K?

A

when buyer accepts goods (by failing to return or notifying seller of acceptance); seller bears risk of return

88
Q

when can a seller’s performance be excused even where goods are destroyed? (3 rqmts)

A

1) goods ID’d when K was made are destroyed,
2) without fault of either party, and
3) before risk of loss passes to the buyer
**NOTE = if goods NOT ID’d until after K made, seller has to prove some impracticability

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