Determinning Terms of K

Question 1

Parol Evidence Rule

Answer 1

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.

Question 2

Components of an Integration

Answer 2

1. whether the writing was intended as the final expression of the agreement; and
2. whether the integration was intended to be complete or partial

Evidence is admissible to show the parties intent

Question 3

Partial Integration

Answer 3

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.

Question 4

Effect of Merger Clause

Answer 4

Modern trend is to consider it as one factor in determinning integration

Question 5

Because Parol Evidence Bars admissibility of extrinsic evidence, certain things fall outside the scope of the parol evidence rule and are thus admissible:

Answer 5

1. Validity Issues
   
   1. formation defects
   2. conditions precedent to effectiveness
2. collateral agreements and naturally ommitted terms
3. interpretation
4. Showing of True Consideration
5. Reformation
6. Subsequent Modifications
7. Additional Terms under UCC

Question 6

Art 2 on Supplemental (Gap Filler) Terms

Answer 6

If terms are missing, Art 2 allows the filling in of missing terms

Question 7

Art 2 on Price

Answer 7

if price is left open then the price is a reasonable price at the time for delivery

Question 8

Art 2 on Place of Delivery

Answer 8

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)

Question 9

Art 2 on Time for Shipment or Delivery

Answer 9

if time not specified, then reasonable time

Question 10

Art 2 on time of payment

Answer 10

time and place at which the buyer is to recieve the goods, if time isnt specified

Question 11

Art 2 on Assortment

Answer 11

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

Question 12

Art 2 on Noncarrier case

Answer 12

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.

Question 13

Art 2 on Carrier Case - Shipment K

Answer 13

Risk of loss passes when delivered to carrier

Question 14

Art 2 on Carrier Case - Destination K

Answer 14

Risk of loss passes when tendered to the buyer at the destination

Question 15

F.O.B.

Answer 15

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.

Question 16

F.A.S.

Answer 16

Free Alongside

Term usually used for goods shipped via boat.

Risk of loss passes once goods are delivered to buyer at the dock.

Question 17

Defective Goods Art 2

Answer 17

Buyer has right to reject the defective goods - risk of loss does not pass to buyer until defects are cured or she accepts

Question 18

Risk of Loss on Sale or Return K

Answer 18

If goods are returned, risk of loss remains with the buyer

Question 19

Risk of Loss on Sale on Approval Ks

Answer 19

doesn’t pass to buyer till she accepts

Question 20

Insurable interest and identification

Answer 20

Art 2 gives buyer a special interest in identified goods. This is insurable

Question 21

Warranties

Answer 21

1. Warranty of Title
2. Warranty Against Infringment
3. Implied Warranty of MerchantabilityImplied Warranty of Fitness for a PArticular Purpose
4. Express Warranties

Question 22

Warranty of Title

Answer 22

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.

Question 23

Implied Warranty of Merchantability

Answer 23

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

Question 24

Implied Warranty of Fitness for a PArticular Purpose

Answer 24

This will be implied whenever:

1. 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
2. the buyer in fact relies on the sellers skill/judgment

Question 25

Express Warranties

Answer 25

Once an express warranty is made, it is very difficult to disclaim

Question 26

Warranties - Limitations on Damages

Answer 26

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.

Question 27

Timing of Warranty Disclaimers

Answer 27

Must be included in the bargaining process.

Limitations on remedies included inside the packaging is not effective against the buyer.

Question 28

“Clickwrap”

Answer 28

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.

Question 29

Damages for Breach of Warranty

Answer 29

Generally difference between value of goods accepted and the value of goods warranted, measured at the time of acceptance.

Question 30

Damages for Breach of Warranty of Title

Answer 30

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.

Question 31

To Whom do Warranties Extend?

Answer 31

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.

Question 32

Modification of K Terms - Consideration

Answer 32

Under general K law, the modification must be supported by new consideration.

Modern view permits modification if:

1. the modification is due to circumstances that were unanticipated by the paties when the K is made; and
2. 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.

Question 33

Modification of K Terms- Writing

Answer 33

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.