Determinning Terms of K Flashcards
Parol Evidence Rule
When the parties to a K express their agreement in wirting with the intent that it emobies the final expression of their bargain, the writing is an integration. Any other expressions made prior to the writing, or contemporaneous with the writing, are inadmissible to vary the terms of the writing.
Components of an Integration
- whether the writing was intended as the final expression of the agreement; and
- whether the integration was intended to be complete or partial
Evidence is admissible to show the parties intent
Partial Integration
If intergration is complete, then the writing cannot be contradicted or supplmented.
If integration is partial, then it can be supplemented with consistent additional terms.
UCC presumes all writings are partial integration.
Effect of Merger Clause
Modern trend is to consider it as one factor in determinning integration
Because Parol Evidence Bars admissibility of extrinsic evidence, certain things fall outside the scope of the parol evidence rule and are thus admissible:
- Validity Issues
- formation defects
- conditions precedent to effectiveness
- collateral agreements and naturally ommitted terms
- interpretation
- Showing of True Consideration
- Reformation
- Subsequent Modifications
- Additional Terms under UCC
Art 2 on Supplemental (Gap Filler) Terms
If terms are missing, Art 2 allows the filling in of missing terms
Art 2 on Price
if price is left open then the price is a reasonable price at the time for delivery
Art 2 on Place of Delivery
if place of delivery is not specified, the place is usually seller’s place of business (if he doesn’t have one, then his home)
Art 2 on Time for Shipment or Delivery
if time not specified, then reasonable time
Art 2 on time of payment
time and place at which the buyer is to recieve the goods, if time isnt specified
Art 2 on Assortment
If k provides for an addortment to be delivered and doesn’t specify which party is to choose, then it is at the buyers option
Art 2 on Noncarrier case
This is where parties did not intend to use a common carrier for delivery.
In such case, if the seller is a merchant, risk of loss passes to the buyer when he takes physical possession of the goods.
If the seller is not a merchant, risk of loss passes on tender of delivery.
Art 2 on Carrier Case - Shipment K
Risk of loss passes when delivered to carrier
Art 2 on Carrier Case - Destination K
Risk of loss passes when tendered to the buyer at the destination
F.O.B.
Free on Board
Risk of loss passes to buyer at the named location.
If a K is silent to this term, then it is a shipment K.
F.A.S.
Free Alongside
Term usually used for goods shipped via boat.
Risk of loss passes once goods are delivered to buyer at the dock.
Defective Goods Art 2
Buyer has right to reject the defective goods - risk of loss does not pass to buyer until defects are cured or she accepts
Risk of Loss on Sale or Return K
If goods are returned, risk of loss remains with the buyer
Risk of Loss on Sale on Approval Ks
doesn’t pass to buyer till she accepts
Insurable interest and identification
Art 2 gives buyer a special interest in identified goods. This is insurable
Warranties
- Warranty of Title
- Warranty Against Infringment
- Implied Warranty of MerchantabilityImplied Warranty of Fitness for a PArticular Purpose
- Express Warranties
Warranty of Title
This warranty arises automatically and need not be mentioned in the K.
This warranty is there are no encumberances or liens against the title of which the buyer is unaware at the time of contracting.
Implied Warranty of Merchantability
Implied in every K for sale by a merchant who deals in goods of a kind that the goods are merchantable. To be merchantible, the goods must at least be “fit for the ordinary purpose for which such goods are used”
Seller’s knowledge of the Defect is not relevant
Implied Warranty of Fitness for a PArticular Purpose
This will be implied whenever:
- any seller, merchent or not, has reason to know the particular purpose for which the goods are to be used and that the buyer is relying on the seller’s skill/judgment to select suitable goods; and
- the buyer in fact relies on the sellers skill/judgment
Express Warranties
Once an express warranty is made, it is very difficult to disclaim
Warranties - Limitations on Damages
Parties may include in K a clause limiting damages for breach of warranty.
Will not be upheld if unconscionable.
Warranty disclaimers that limit the damages for personal injury caused by a breach of warranty on consumer goods are PFC unconscionable.
Timing of Warranty Disclaimers
Must be included in the bargaining process.
Limitations on remedies included inside the packaging is not effective against the buyer.
“Clickwrap”
Computer software comes with terms at installation process, and purchaser must click agree.
These disclaimers are typically upheld on the rationale that the purchaser can return if the software if he disagrees with the conditions.
Damages for Breach of Warranty
Generally difference between value of goods accepted and the value of goods warranted, measured at the time of acceptance.
Damages for Breach of Warranty of Title
Goods are reclaimed by the true owner or lien holder, thus dispoosessing the buyer. Buyer may rescind the K, revoke acceptence of goods, or sue for damages.
Damages are the value of the goods as warranted.
To Whom do Warranties Extend?
Warranty liability extends to any natural person who is the family or household of the buyer or who is a guest in the buyer’s home if it reasonable to expect that the person may use, consume, or be affected by the goods and the person suffers personal injury because of the breach of warranty.
Modification of K Terms - Consideration
Under general K law, the modification must be supported by new consideration.
Modern view permits modification if:
- the modification is due to circumstances that were unanticipated by the paties when the K is made; and
- it is fair and equitable
UCC allows for good faith promises of new/different terms by the parties to a sales K are valid w/o consideration.
Modification of K Terms- Writing
A written K may be modified orally.
For sale of goods Ks, must be in writing if it will fall under the statute of frauds.
