Determining the Parties’ Obligations

Question 1

Parol Evidence Rule: 3 most important things about PER

Answer 1

1. No e at the end of parol
2. Parol means spoken word, but this rule also covers written prior agreements
3. Not a rule of evidence. It is a rule of substantive law that has evidentiary consequences (bc it discharges prior agreements).

Question 2

Parol Evidence Rule: Two upshots of PER being a rule of substantive law rather than evidence rule

Answer 2

• Under Erie, substantive matters gov by state law, so we look for state specific parol evidence rules.
• If you fail to object to intro of evidence, you waive that right to object later. But since not evidence, there is no waiver effect. You can raise it later or on appeal.

Question 3

Parol Evidence Rule: Basic idea

Answer 3

If you have a writing that is final with respect to at least 1 term, it is going to have the effect of discharging some prior agreements.

The degree of how much gets discharged depends on whether the written agreement is completely or partially integrated. (naturally, the more integrated, the more it kicks out)

Completely integrated kicks out all prior agreements within the scope of that writing (even if consistent)

Partially integrated kicks out all prior agreements that are inconsistent.

Question 4

Parol Evidence Rule: why is it called parol evidence?

Answer 4

If the parol agreement is discharged that means it is invalid, so naturally you cannot bring evidence to try to enforce it… it would be pointless.

Question 5

Parol Evidence Rule: Two approaches to whether the written agreement is completely or partially integrated

Answer 5

1. Look at the writing only (PA)
   - If it appears to be a contract complete within itself, isn’t missing key terms you would expect, and has no uncertainty, it is conclusively presumed that it is completely integrated.
2. Written agreement + parol agreement (CA)
   - start by looking at the written agreement, then look at the parol agreement(s) to determine whether the parties intended to be included, excluded, or otherwise affected by the writing.
   Reasoning = there are a lot of cases where a prior agreement would not appear missing that the written agreement is silent on.

Question 6

Parol Evidence Rule: what if the parol agreement is inconsistent with an implied in law term of the integrated agreement?

Answer 6

The agreements consists of the writing and the implied in fact terms BUT DOES NOT include implied in law terms.

Question 7

Parol Evidence Rule: what is an integration clause, merger clause, entire agreement clause?

Answer 7

Parties writing a K with the knowledge of PER saying in the K that this is the entire agreement and it is completely integrated and there are no other agreements about this subject matter.

Very influential evidence on complete v. partial

Question 8

Parol Evidence Rule: if parol agreement is discharged, is the parol agreement ever allowed to be introduced as evidence?

Answer 8

Yes! You can’t intro parol for the purpose of enforcing parol, but if you are bringing it for another purpose (see §214) it is allowed.

Question 9

Parol Evidence Rule: reforming a K due to mistake

Answer 9

Parol evidence may be introduced (not effected by PER) to reform a written K if (1) there is a mistake regarding the contents of the written agreement and (2) it is a mutual mistake.

Heavy burden on the party seeking reformation to establish mutual mistake. (dirt sandwich)

Question 10

Parol Evidence Rule: how does the PER affect modifications made to the contract?

Answer 10

Not at all.

PER only deals with prior agreements on the same subject.

Question 11

No Oral Modification (NOM) Clauses: traditional rule

Answer 11

No oral modification clauses are NOT enforceable.

People have the power to mutually rescind and then enter a new K that is the exact same but with the modification.

Question 12

NOM Clauses: Statutory exceptions

Answer 12

Legislatures have realized there are certain situations where you would want NOM clauses to be enforceable and have made some statutes for them.

Ex: business worried about a rouge agent binding the business.

Question 13

NOM Clauses: UCC Sale of Goods

Answer 13

2-209
If seller included a NOM clause it is not enforceable unless it is separately agreed to by the buyer (initial/sign)
EXCEPT between two merchants it is enforceable.

Question 14

NOM clauses: reliance

Answer 14

Even when NOM clauses are enforceable, reliance matters.

Party cannot induce reliance to modify K, get the benefit, and then assert NOM clause to avoid payment

Question 15

Plain Meaning Rule: 3 ways a contract can be indefinite

Answer 15

1. Vague term (term where the edges are not clear)
2. Ambiguous term (capable of two+ meanings)
3. Omitted term (clear there has to have been agreement about a missing term like payment)

Question 16

Plain Meaning Rule: generally

Answer 16

Decides whether you can admit extrinsic evidence for purposes of interpreting the contract.

Application of the rule:
1. Court determines whether the contract language is ambiguous/indefinite (COURT)
— if not, no extrinsic evidence allowed.

2. If ambiguous, use extrinsic evidence to interpret. (FACT FINDER)

Question 17

Plain Meaning Rule: Two different ways to operate test

Answer 17

1. California Rule
   — When judge performs step 1, the judge should consider the extrinsic evidence, and if the judge decides that it is ambiguous in the light of the extrinsic evidence, you can use the extrinsic evidence to detiene meaning.
   Boiled down to = you can look at extrinsic evidence while answering step 1.
2. Four Corners Rule
   — When answering step 1, a judge may ONLY look at the “four corners” of the document itself.
   “if the agreement is reasonably susceptible of only one meaning, a court is not free to alter the K to reflect its personal notions of fairness and equity.

Question 18

Sources of Meaning (in order of persuasiveness from §203(b)

Answer 18

1. Language
2. Negotiating history
3. Course of performance evidence
4. Course of dealing
5. Trade usage

Question 19

Cannons of Construction

Answer 19

1. “Contra preferentem” = A contract is interpreted “against the proffered.” Break a tie against the drafter
2. The specific controls the general
3. Cannon against surplusage = read k so every word/term does work.
4. Expressio units est exclusion alter its = the expression of one is the exclusion of the other
5. egusdem generis = general term is “of the same kind” as the specific term it is associated with.
6. noscitur a socios = a specific term in a list is “known by its associates”

Question 20

Gap Fillers: What are they?

Answer 20

Terms that the courts use (the law fills them in) either always, or when parties do not specify otherwise.

Question 21

Gap Fillers: mandatory terms

Answer 21

Food faith and fair dealing.
Obligates you to try /use reasonable care to make everything work out
Only applies in enforcement and performance (not negotiation)

Question 22

Gap Fillers: default terms — common examples

Answer 22

Employment contract at will
Contract rights presumed to be assignable
Non-personalized duties are delegable

Question 23

Gap fillers: default terms — UCC

Answer 23

Price
Implied warranty of merchantability
Implied warranty of fitness
You can expressly excluded warranty of fitness/merch

Question 24

Misunderstanding: types of ambiguity

Answer 24

Patent Ambiguity = any reasonable reader would see that there is ambiguity here and it could mean multiple things.

Latent ambiguity = the ambiguity is not obvious on its face

Question 25

Misunderstanding: if due to patent ambiguity

Answer 25

No rescission is allowed. Courts will determine which interpretation wins. If TRULY a tie, contra preferentem (against drafter).

Question 26

Misunderstanding: if due to latent ambiguity

Answer 26

Levels of culpability analysis applied to determine whose interpretation wins / if the court will rescind the K.

Question 27

Misunderstanding: Culpability analysis

Answer 27

Courts will choose the interpretation of the less culpable party
If the parties are EQUALLY at fault, we have no objective way to pick, so we throw out the contract.

Question 28

Misunderstanding: levels of culpability (most to least)

Answer 28

1. You know the other party means something else
2. You have reason to know the other party means something else
3. You neither know nor have reason to know (no culpability)