Determining Terms

Question 1

What is the parol evidence rule?

Answer 1

Keeps out evidence of prior or contemporaneous agreement (either oral or written) that contradicts a later writing

Question 2

What are the exceptions to Parol Evidence Rule (so the evidence gets in) besides the major one?

Answer 2

• to correct a clerical error (e.g. typo)
• to interpret a vague or ambiguous term
• to challenge validity of contract

Question 3

How can you use conduct to determine the terms of the contract?

Answer 3

Most to least important:

Course of Performance: how parties performed under this contract

Course of Dealing: how parties performed under prior contracts with each other

Usage of Trade: what others do in similar contracts

Question 4

What are seller’s warranties of quality in sale of goods (art. 2)?

Answer 4

Express warranty: description, promise, use of sample or model (but NOT vague/subjective/opinion)

Implied Warranty of Merchantability: goods are fit for their ordinary purpose (seller must be merchant who deals in goods of the kind (e.g. has special knowledge about the goods)

Implied Warranty of Fitness for a Particular Purpose: goods are fit for a buyer’s particular purpose (seller (not required merchant) must know buyer has special purpose and that buyer is relying on seller to select suitable goods)

Question 5

What can limit warranty liability on sale of goods?

Answer 5

Disclaimers can disclaim implied, but not express, warranties.

Look for “as if” and “with all faults” and must be conspicuous

If disclaiming IWMerchantability, must mention that specifically.

Question 6

How do you determine whether a writing was partially or fully integrated?

Answer 6

Whether the writing was intended as a full expression of the party’s terms.

• UCC presumes all writings are partially integrated

** if merger clause limiting outside terms, typically can’t bring in outside terms

Question 7

What is the result of whether a writing is partially or fully integrated?

Answer 7

Fully integrated: writing can’t be contradicted or supplemented

Partially Integrated: additional terms allowed as long as they don’t contradict the writing

Question 8

What is the UCC gap-filler for price?

Answer 8

reasonable price at time of delivery

Question 9

What is the UCC gap-filler for place of delivery?

Answer 9

seller’s place of business

Question 10

What is the UCC gap-filler for time for shipment or delivery?

Answer 10

reasonable time

Question 11

What is the UCC gap-filler for time for payment?

Answer 11

time and place at which buyer is to receive the goods

Question 12

What is the UCC gap-filler for an assortment of goods (e.g. blouses at different sizes and colors)?

Answer 12

Buyer’s option

Question 13

Can seller limit buyer’s remedies under a contract for the sale of goods?

Answer 13

Seller can limit remedies for breach of any warranty (express or implied) as long as the limitation is not unconscionable.

BUT,

can’t limit remedies for personal injury in the case of consumer goods (presumed to be unconscionable)

Question 14

What is risk of loss?

Answer 14

determines who bears the loss when goods are damaged before buyer gets them and neither buyer nor seller is to blame.

Question 15

What is the result if buyer or seller bears risk of loss?

Answer 15

If seller bears ROL:
seller must provide new goods to buyer for no additional cost, or be liable for breach of K

If buyer bears ROL: buyer must still pay contract price

Question 16

What is the hierarchy to determine who bears risk of loss?

Answer 16

1. agreement between parties
2. if breach occurred, breaching party bears risk of loss (e.g. if party shipped late, even if it had nothing to do with the loss)
3. Delivery to common carrier (UPS, Amtrak, etc.): ROL shifts to buyer when seller completes its delivery obligations

Question 17

How can the parties contract to shift risk of loss if they are using common carrier?

Answer 17

Shipment contract: seller must get the goods to a common carrier, make delivery arrangement, and notify buyer; then risk of loss is shifted to buyer

Destination contract: seller must get the goods all the way to a specific destination before risk of loss is shifted

Question 18

How can the parties contract to shift risk of loss if they are not using common carrier (e.g. buyer picks up or a seller delivers)?

Answer 18

Depends on whether seller is a merchant:

Merchant-seller: Seller bears ROL until buyer takes possession of the goods

Non-merchant seller: ROL passes sooner; buyer bears ROL once seller “tenders” the goods (makes them available to buyer)