Gap Fillers and Warranties

Question 1

Where do gap fillers come from?

Answer 1

1) Courts - Restatement 204
2) Statute - UCC 2-305 through 2-311
3) Warranties - UCC 2-312 - 316

Question 2

Restatement 200- Interpretation of Promise or Agreement

Answer 2

Interpretation of a promise or agreement or a term thereof is the ascertainment of its meaning.

Question 3

Restatement 201- Whose Meaning prevails

Answer 3

(1) Where the parties have attached the same meaning to a promise or agreement, or term thereof, it is interpreted in accordance with taht meaning.
(2) Where the parties have attached different meanings to a promise or agreement or a term thereof, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made:
(a) that party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party; or
(b) that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party.
(3) Except as stated in this Section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent.

Question 4

Restatement 202- Rules in Aid of Interpretation

Answer 4

Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight.

(2) A writing is interpreted as a whole, and all writings that are par of that same transaction are interpreted together.
(3) Unless a different intention is manifested,
(a) where language has a generally prevailing meaning, it is interpreted in accordance with that meaning;
(b) technical terms and words of art are given their technical meaning when used in a transaction within their technical field.
(4) Where an agreement involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection is given great weight in the interpretation of the agreement.
(5) Where ever reasonable, the manifestations of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance, course of dealing or usage of trade.

Question 5

Restatement 203- Standards of Preference in Interpretation

Answer 5

In the interpretation of a promise or agreement or a term thereof, the following standards of preference are generally applicable:
(a) an interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves unreasonable, unlawful, or of no effect;
(b) Express terms are given greater weight than course of performance, course of dealing, and usage of trade.
Express terms > Course of performance > Course of dealing > usage of trade.
(c) Specific terms and exact terms are given greater weight than general language;
(d) separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated.

Question 6

Restatement 204- Supplying an Omitted Essential Term

Answer 6

When the parties to a bargain sufficiently defined to be a contract have no agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court.

Question 7

Restatement 205- Duty of Good Faith and Fair Dealing

Answer 7

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement

Question 8

Restatement 206- Interpretation against the Draftsman

Answer 8

In choosing among the reasonable meaning of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds.

Question 9

Define: Patent Ambiguity-

Answer 9

A term or phrase that is ambiguous on its face.

Question 10

Define: Latent Ambiguity

Answer 10

Parties cannot realize that there is an ambiguity until later on in the contract.

Question 11

How are 1) patent ambiguities solved and 2) latent ambiguities solved

Answer 11

1) patent ambiguities are solved by deciding interpretation through the reasonable person standard
2) Latent ambiguities are solved by rescinding the contract

Question 12

Can there be mutual assent to a contract with a mistake?

Answer 12

There can be mutual assent in a contract made even with a mistake.

Question 13

Can there be mutual assent to a contract with a misunderstanding?

Answer 13

No there is no mutual assent because the parties had different ideas as to the meaning of the contract.

Question 14

Will parol evidence be allowed to prove:

1) Mistake?
2) Misunderstanding?

Answer 14

1) Yes, extrinsic will be allowed to prove a mistake

2) yes, extrinsic evidence will be allowed to prove a misunderstanding..

Question 15

UCC 2-312 - Warranty of Title and Against Infringement; Buyers Obligation Against Infringement

Answer 15

(1) There is a contract for sale a warranty by the seller that:
(a) the title conveyed shall be good, and its transfer rightful; and
(b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.
(2) Unless specifically stated in the contract, this warranty is always present.

Question 16

UCC 2-313- Express Warranties by Affirmation, Promise, Description, Sample

Answer 16

(1) Express Warranties by the seller are created as follows:
(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise made.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

Question 17

Restatement 20: Effect of a misunderstand

Answer 17

(1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and:
(a) neither party knows or has reason to know the meaning attached by the other; or
(b) each party knows or each party has reason to know the meaning attached by the other.
(2) The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if:
(a) that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first party; or
(b) that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party.

Question 18

UCC 2-314: Implied Warranty: Merchantability; Usage of Trade

Answer 18

Unless otherwise excluded, a warranty that the goods shall be merchantable is implied in a contract for sale of goods as long as they are merchants in good of that kind.

(2) Goods to be merchantable must be at least such as:
a) Pass without objection
b) are of fair average quality
c) fit for ordinary purposes
d) be within variations allowed by the contract
e) adequately prepared, contained, packaged, and labeled as required.

Question 19

UCC 2-315: Implied Warranty- Fitness for Particular Purpose

Answer 19

Where the seller has reason to know at the time of contracting has reason to know of a particular purpose which the good are required and that the buyer is relying on the seller’s skill or judgement to select or furnish suitable goods, there is an implied warranty that that goods shall be fit for such purpose.

Question 20

Implied Warranty: Fitness for Ordinary Purpose

How to know if the good is being used for its ordinary purpose?

Answer 20

The ordinary purposes for which goods are used, go to uses which are customarily made for the goods in question.

Question 21

What is the implied warranty of fitness for particular purpose?

Answer 21

It implies a warranty that the goods will be good for the reason which the seller knows the buyer purchased it for.

Question 22

How to distinguish between “warranty of fitness for particular purpose” from the “warranty of merchantability for ordinary purposes?”

Answer 22

“A ‘particular’ purpose differs from the ordinary purpose for which the goods are used in that it envisages a specific use by the buyer which is peculiar to the nature of his business whereas the ordinary purposes for which goods are used are those envisaged in the concept of merchantability and go to uses which are customarily made of the goods in question.”

Question 23

Is there a way to exclude implied warranties from a contract?
UCC 2-316- Exclusion or Modification of Warranties

Answer 23

An implied warranty can be negated or limited wherever reasonable when expressly stated. The language must be conspicuous and must be in writing.