Gap-Fillers, Interpretation, and the Parol Evidence Rule

Question 1

UCC Default Rules for the Sales of Goods: Implied Warranties

3

Answer 1

1. warranty of title
2. warranty of merchantability
3. warranty of fitness for a particular purpose

Question 2

Warranty of title means?
(3)

How to modify?

Answer 2

1) Good title to the goods (I really own them)
2) The rightful transfer of the goods (allowed to sell them)
3) No liens are attached to the goods

Can be excluded or modified by specific language or circumstances showing no good title.

Question 3

Warranty of Merchantability is?

Answer 3

(a) The warranty guarantees that the goods are fit for the ordinary purposes for which those goods would be used

Question 4

Warranty of merchantability only applies if?

Answer 4

The seller is a merchant

Question 5

Warranty of merchantability can be displaced by?

Answer 5

1) Specific mention of the word “merchantability” + conspicuousness (bold font) if in writing;
+
2) Any other language or circumstances that are reasonably understood to exclude the warranty
“As is”
“Patent defects” easily observable defects → obvious defects

Question 6

Warranty of Fitness for a Particular Purpose is found when?

Answer 6

The warranty only applies where, at the time of contracting, the seller has good reason to know

1) The particular purpose for which the goods are required; and,
2) That the buyer is relying upon the seller’s skill to select reasonable goods

Question 7

How to disclaim warranty of fitness?

Answer 7

1) When the disclaimer is in writing + clear + conspicuous (bold font)

or

2) If the goods have obvious defects

Question 8

UCC default rule for a missing price term?

Answer 8

Reasonable market price at the time established for delivery

Question 9

UCC default rule for a missing time term?

Answer 9

A reasonable time

Question 10

UCC default rule for a missing place of delivery term?

Answer 10

Seller’s place of business

Question 11

Common law default rule for a missing price term?

Answer 11

Reasonable value for the services rendered

Question 12

Common law default rule for a missing duration term in an employment contract?

Answer 12

At will employment

Question 13

Obligation of Good Faith and Fair Dealing for both UCC and Common Law?

Answer 13

(1) In general, “good faith” is defined as:
honesty in-fact

(2) In the case of a merchant, “good faith” means:
honesty in-fact + observance of reasonable industry standards

Question 14

When is the Obligation of Good Faith and Fair Dealing triggered?

Answer 14

where the terms of the contract leave a critical term, such as:

1. the price,
2. satisfaction,
3. or quantity

open to the determination of one party.

Question 15

Under the UCC, the party entitled to determine the particular quantity of goods to be sold—either the buyer demanding delivery of his requirements or the seller demanding purchase of her output—must

Answer 15

make that determination in good faith.

	- Cannot lie about output 
	- Cannot lie about your actual requirements

Question 16

For outputs and requirement contracts, when will obligation be voided?

Answer 16

prohibits any unreasonably disproportionate demand or tender, if there was either:

1) A stated estimate; or,
2) A past course of dealing

Question 17

When one party has reason to know of the other parties subjective understanding

Answer 17

the first party is bound by it

Question 18

When at the time of contracting, both parties have the same subjective understanding

Answer 18

then it controls

Question 19

The Rule of Contra Proferentem

Answer 19

(1) If an ambiguous term is included in the contract, then: in case of doubt, construe against the drafter

Question 20

The Doctrine of Reasonable Expectations applies when?

Effect?

Answer 20

Contracts of adhesion (e.g. insurance)

The doctrine only applies to defeat the enforceability of: the boilerplate terms that are inconsistent with the reasonable expectations of the purchaser.

Question 21

In construing a contract, what order to look for evidence?

4

Answer 21

express term > course of performance > course of dealing > usage of trade

Question 22

Usage of trade is

Answer 22

is any practice or method of dealing having such regularity of observance in a place or trade as to justify an expectation that it will be observed with respect to the transaction in question.

Question 23

Course of dealing is

Answer 23

a pattern of conduct concerning previous transactions between the parties that is fairly to be regarded as establishing a common basis of understanding for interpreting their subsequent expressions and other conduct.

Question 24

Course of performance is?

Answer 24

present when a particular contract involves repeated occasions for performance by a party and the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.

Question 25

Trade Usage, Course of Dealing, and Course of Performance is admissible in contracts to do what?

What can it not do?

Answer 25

Can

1. fill in gaps
2. resolve ambiguities

Cannot
Contradict express terms

Question 26

Course of performance evidence can establish

2

Answer 26

establish a waiver
or
modification of express terms

Question 27

When a particular contract is partially integrated, it means that:

Answer 27

The terms contained within the writing is intended to be the final expression of those terms

Question 28

when a contract is completely integrated, it means that:

Answer 28

The parties intend the contract to be the complete + exclusive statement of all the terms

Question 29

The question of whether the terms of a contract are partially integrated (i.e., final) and whether an integration is complete (i.e., exhaustive) is for who to decide?

Answer 29

The judge, not the jury

Question 30

What is the best evidence of a completely integrated contract?

Answer 30

a Merger clause

That the writing contains the “complete and entire agreement of the parties” or other words to that effect

Question 31

What are the three purposes parole evidence is introduced?

3

Answer 31

(1) To explain or interpret the terms of the written contract
(2) To supplement the terms of the written contract
(3) To contradict the terms of the written contract

Question 32

Legality of using parole evidence to explain or interpret terms of a written contract

Answer 32

Parole evidence is always admissible for this purpose

Question 33

Common Law Legality of using parole evidence to supplement terms of a written contract?

Answer 33

parole evidence is admissible for this purpose;

unless the contract is completely integrated

Question 34

Steps in analyzing a Parole Evidence Question

Answer 34

(1) What is the purpose for which the evidence is being introduced?
(2) Does the evidence relate to a term or contract that is integrated? –> partially or completely?

Question 35

UCC Legality of using parole evidence to supplement terms of a written contract?

Answer 35

Trade usage, course of dealings, and course of performance can supplement a completely integrated agreement

Question 36

Legality of using parole evidence to contradict terms of a written contract?

Answer 36

parole evidence is not admissible for this purpose

Question 37

The parol evidence rule only applies to

3

Answer 37

oral or written communications
\+
made prior to or contemporaneously with 
\+
the execution of a written agreement.

Question 38

Does the parole evidence rule apply to an Attack on the Validity of the Written Agreement

Answer 38

no, can use parole evidence to prove that the written agreement is invalid or unenforceable

Question 39

How can a party assert an attack on the validity of a written agreement using parole evidence?
(4)

Answer 39

1. Evidence that the parties orally agreed to a condition precedent to the contract taking effect will not be barred.
2. Evidence that a written agreement lacks consideration or that there is a false recital of consideration is not barred
3. Evidence of mistake or duress is not barred by the parole evidence rule
4. Parole evidence of fraud is always admissible