Determining Terms of the Contract Flashcards
Parol Evidence Rule
Parol Evidence Rule - Supplementing, Explaining, or Contradicting Terms
Any other expressions, written or oral, made prior to the writing, as well as any oral expressions contemporaneous with the writign, are inadmissible to vary the terms of the contract.
PER -
* Excludes evidence of prior or contemporaneous agreements contradicting final the writing
* Final Writign is dominant
THERE HAS TO BE A FINAL WRITING FOR PER TO BE TRIGGERED
Parol Evidence Rule
Is the writing an “integration”
There are two components
1. whether the writing was inteded as the final expression of the agreement; and
2. whether the integration was inteded to be complete or partial.
Evidence is admissible to show teh parties’ intent.
Parol Evidence Rule
Partial Integration - Additional Terms Permitted
You can bring in integration if it’s partial NOT complete
Parol Evidence Rule
Effect of Merger Clause
A merger clause recites that the agreement is the compelte agreement between the parties. The presence of a merger clause is usally determinative in large commercial contracts.
For most contracts, however, teh modern trend is to consider it as one factor in determining integration.
Parol Evidence Rule
Evidence outside Scope of Rule
Other forms of extrinsic evidence may be admitted if htey won’t bring about htis result, that is, they will fall outside of the scope of the parol evidednce rule:
- Validity Issues - a party may attack the validity of a contract with extrinsic evidence. The party concedes that the writing reflects the agreement but asserts that the agreement never came into being becuase of any of the following: Formation defects, Conditions PRecedent to Effectiveness
- Collateral Agreements and Nautrally Omitted Terms (i.e., parol evidence admitted if the alleged parol agreement is collateral to the written obligation - related to the subject matter but not part of the primary promise - and does not conflict with it) (Naturally omitted terms doctrine - allows terms that would natrualy be omitted from the written agreement if: 1) it does not conflict with the written integation; and 2) it concerns a subject that similarly situated partes would not ordinarily be expected to include in teh written instrument.
- Interpretation - if there is uncertainty or ambiguity in teh written agreement’s tersm or a dispute as to the meaning of those terms, PER can be received to aid teh fact finder in reaching a correct interpretation of teh agreement.
- Showing of True Consideration - PER will not bar extrinsic evidence showing the true consideration paid
- Reformation - PE inapplicable if a party to a written agreement alleges facts entitling him to reformation of teh agreement.
- Subsequent Modifications - PE can be offered to show subsequent modifications of a written contract
Parol Evidence Rule
Additional Terms Under Art 2
Art 2 generally follows the rules of PER, providing that a party can’t contradict a written contract but may add consistent additonal terms unless:
1. there is a merger clause, or
2. the courts find from all of the circumstances that hte writing was intended as a complete and exclusive statemetn of the terms of the agreement.
General Rules of Contract Construction
General Rules of Contract Construction (Top 3)
- The parties’ course of performance (that is, if a contract invovles repeated occasions of performance by either party and the other party has th eopproutnity to object to such performance, any course of performance accepted or acquiesced to is relevant in determining the meaning of the contract) - i.e, parties conduct under prior installemnts of current contract
- The parties’ course of dealing (that is, teh sequence of conduct concernign previous transactions between teh parties to a particular transaction that may be regarded as establishign a common basis of their understanding) i.e., Parties conduct in prior contracts
- A usage of trade (that is, practice or method of dealing regularly observed ina particular business setting so as to justify an expectation that it will be followed int eh transaction in question) i.e., industry norms parties are aware of
General Rules of Contract Construction
General Rules of Contract Construction (Additional/Others)
- Contracts will be construed a sa “whole”
- Courts will construe words according to their “ordinary meaning”
- If a provision appears to be inconsistent, written or typed provisions will prevail over printed provisions
- Courts generally try to reach a determination that a contract is valid and enforceable.
- Ambiguities in a contract are construed against the party preparing the contact, absent evidence of the intention of hte parties.
- When Rules conflict: express terms are given greater weight than course of performance, course of dealing, and usage of trade; course of performance is given greater weight than course of dealing or usage of trade; and course of dealing is given greater weight than usage of trade.
Article 2: Provisions on Interpreting Contracts
Supplemental (Gap-Filler) Terms
The Key to forming a contract for the sale of goods is the quantity term. If other terms are missing from the agreement, Art 2 has gap-filler provisions to fill in teh missing terms:
- Price - reasonable price at the time for delivery
- Place of Delivery - seller’s place of business
- Time for Shipment or Delivery - reasonable time
- Time for Payment - time and place at which the buyer is to receive the goods
- Assortment at the buyer’s option
Article 2: Provisions on Interpreting Contracts
Warranties
Contracts for sale fo goods automatically include a warranty of title (in most cases). They also may include certain implied warranties and express warranties:
Express Warranties -
* Any affirmation of fact or promise made byt he seller to the buyer, any description of the goods, and any sample or model creates an express warranty if the statement, description, sample, or model is part of the absis of the bargain.
* NOTE: Distinguish Statements of Value or Opinion - statement relating merely to the value of the goods, or a statemetn purporting to be only the seller’s opinion or commendation of the goods, doesn’t create an express warranty
Article 2: Provisions on Interpreting Contracts
Express Warranty
Express Warranties -
* Any affirmation of fact or promise made byt he seller to the buyer, any description of the goods, and any sample or model creates an express warranty if the statement, description, sample, or model is part of the absis of the bargain.
* NOTE: Distinguish Statements of Value or Opinion - statement relating merely to the value of the goods, or a statemetn purporting to be only the seller’s opinion or commendation of the goods, doesn’t create an express warranty
Article 2: Provisions on Interpreting Contracts
Implied Warranty
Implied Warranty of Merchantability
Implied in every contract for sale by a merchant who deals in goods of the kind sold, there is a warranty that the goods are merchantable. To be merchantable, goods must at least be “fit for the ordinary purpose for which such goods are used.
Implied Warranty of Fitness for a Particular Purpose
A warranty will aslo be implied in a contract for the sale of goods whenever:
1.Buyer comes in with particular purpose
2.seller know of particular purpose
3.seller picks out goods fit for buyer’s particular purpose and knows buyer is relying on seller’s skills and judgment
4.Buyer relies on the seller’s skills and judgment
NOTE: the seller’s knowledge of defect is not relevant in ALL implied warranty cases.
Article 2: Provisions on Interpreting Contracts
Warranty of Title and Against Infringement
Warranty of title
* Any seller of goods warrants that the title transferred is good, that the transfer is rightful, and that there are no liens or encumbrances against the title of which the buyer is unaware at thetime of contracting. This warranty arises automatically and need not be mentioned in the contract.
Warranty Against Infringement
* A merchant seller regularly dealing in goods of the kind sold also automatically warrants that the goods are delivered free of any patent, trademark, copyright, or similar claims. But a buyer who furnishes specifications for the goods to the seller must hold the seller harmless against such claims.
Disclaimer of Warranties - Warranty of Title
The title warranty can be disclaimed or modified only by specific
language or by circumstances that give the buyer notice that the
seller does not claim title or that they are selling only such rights
as they or a third party may have (for example, a sheriff’s sale).
Disclaimer of Warranties - Implied Warranties
The implied warranties of merchantability and fitness for
a particular purpose can be disclaimed by either specific
disclaimers or general methods of disclaimer.
