Determining the Terms of the Contract Flashcards
Parol Evidence Rule
Rule: When the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain (i.e. the writing is an integration), any other expressions -written or oral- made prior to or contemporaneous with the writing, are indadmissible to vary teh terms of the writing.
Article 2 Parol Evidence
Rule: A party cannot contradict a written contract but he may add consistent additional terms unless:
- there is a merger clause; or
- the courts find from all the circumstances that the writing was intended as a complete and exclusive statement of the terms of teh agreement.
Writings may be explained or supplemented by the following, whether or not the writing appears ambiguous:
- Course of dealing;
- A usage of trade;
- Course of performance.
Battle of the Forms
Rule: Determining which terms come into a contract under Article 2 depends on whether the parties are merchants.
Contracts with non-merchant:
- The additional or different terms do not come in unless the offeror expressly agrees.
**Contract between merchants w/ additional terms: **Additional terms are included when both parties are merchants unless:
- They materially alter the original terms;
- The offer expressly limits acceptance to the terms of the offer; or
- The offeror has already objected to the additional terms or objects within a reasonable amount of time.
Contract between merchants w/ different terms: There is a split of authority:
- Some courts treat different terms the same as additional terms (see above).
- Other courts use “knockout rule” where conflicting terms are knocked out and filled by UCC.
UCC Gap Fillers
Price:
- If: (i) not specified; (ii) left open to be agreed upon and fail to do so; or (iii) set to be fixed by third party or agency and not set,
- Then: price is a reasonable price at the time of delivery.
Place of Delivery:
- Usaully seller’s place of buiness, if he has one, or otherwise seller’s home.
Time for Shipment or Delivery:
- When not specified, due in a reasonable amount of time.
Time for Payment:
- If not specified, due at the time and place at which the buyer is to recieve goods.
Assortment:
- If contract calls for an assortment of goods and does not specify who is to choose then the assortment is at the buyer’s opinion. If party with the right does not decide seasonably, other party may choose or treat failure as a breach.
Noncarrier Case (UCC)
Rule: A sale that the parties did not intend that the goods be moved by a common carrier. In such case:
- If the seller is a merchant, risk of loss passes to the buyer only when she takes physical possession of the goods.
- If seller is not a merchant risk of loss pases to buyer upon tender of delivery.
Carrier Case (UCC)
Defined: A carrier case is a sale in which it appears that the parties intended the goods to be moved by a carrier. There are two types of carrier cases:
- Shipment Contract
- Destination Contract
Shipment Contract
Rule: If the contract authorizes or requires the seller to ship the goods but does not require delievery at a particular destination then it is a shipment contract.
- Risk of loss passes to the buyer when the goods are delivered to the carrier.
Destination Contract
Rule: If the contract requires the seller to deliver the goods at a particular destination, the risk of loss passes to the buyer when the goods are tenderd to the buyer at that destination.
Common Delivery Terms (C.I.F. ; C. & F. ; F.A.S. ; F.O.B)
C.I.F. and C. & F.: “Cost, insurance, freight” and “Cost and freight.”
- These terms mean that the price in teh contract includes the price of the goods, the cost of shipping them to the buyer, (and for CIF) cost of insurance for benefit of buyer in case goods are destroyed in transit.
F.A.S.: “Free Alongside”
- Generally only used when goods are shipped by boat. Risk of loss passes to the buyer once the goods are delivered to the dock.
F.O.B.: “Free on Board” always followed by a location.
- Risk of loss passes to the buyer at the named location. Seller bears the risk and expense of getting the goods to the named location.
Sale or Return
Defined: Buyer takes goods to resale but may return them if unable to resell.
Rule: Rules for orindary sale apply, but if goods are returned to the seller, risk ramins on the buyer while goods are in transit.
Sale on Approval
Defined: Buyer takes goods for the trial period and may return them even though they conform to the contract.
Rule: Risk does not pass until the buyer accepts goods (by failing to return them or notify seller of intention within the required time). If buyer decides to return the goods, return is at seller’s risk.
Implied Warranty of Title
Defined: Arises from the sale of goods by any seller and provides that title is good, tranfer is rightful, and no liens or ecumbrances.
Disclaimer: By specific language or circumstances showing seller does not claim title.
Implied Warranty of Merchantabilty
Defined: Arises from the sale of goods by merchant seller only, and provides that goods are fit for their ordinary purpose.
Disclaimer: By disclaimer mentioning “merchantability.” If it is a written disclaimer then it must be conspicuous (Bold, all caps, etc.).
Implied Warranty of Fitness for Particular Purpose
Defined: Arises by sale of goods where any seller has reason to know of particular purpose and of buyer’s reliance on seller to choose suitable goods.
Disclaimed: By conspicuous written disclaimer, or langauge such as “as is.”
Express Warranty
Defined: By affirmation of fact, promise, description, model, or sample by any seller.
- Be careful to note the difference between opinions which do not create express warranties.
Disclaimer: Extremely difficult to disclaim.
