Gap-Fillers, Interpretation, Parole Evidence Rule

Question 0

Elements of the Implied Warranty of Title

Answer 0

Seller warrants that

1. They have title to the goods
2. They have the right to transfer the goods
3. The goods are sold without liens

Question 1

Implied Warranties under the UCC - List

Answer 1

Warranty of Title
Warranty of Merchantability
Warranty of Fitness for a Particular Purpose

Question 2

How the implied warranty of title can be modified or excluded

Answer 2

Specific Language in the Agreement

Circumstances that give the buyer reason to know that seller does claim to have unencumbered title

Question 3

Warranty of Merchantability

Answer 3

Goods are fit for the ordinary purpose for which they would be used.

Only applies if seller is a merchant.

Question 4

How the warranty of merchantability can be displaced

Answer 4

Specific mention of Merchantability in the disclaimer AND a conspicuous disclaimer if in writing.

Or any language, such as “AS IS” or PATENT DEFECT that would be reasonably understood by a buyer to exclude the warranty.

Question 5

Warranty of Fitness for a Particular Purpose

Answer 5

Goods are fit for the particular purpose the buyer intends to use them.

Applies where at the time of contracting the seller has good reason to know the 1.) particular purpose for which the product is purchased and 2.) the buyer is relying on the sellers skill or judgement in selecting reasonable goods.

Seller need not be a merchant

Question 6

How the warranty of fitness for a particular purpose can be negated.

Answer 6

Where the disclaimer is in writing the language is CLEAR AND CONSPICUOUS. or

The goods have patent defects that are obvious.

Question 7

UCC - Creation of Express Warranties

Answer 7

express warranties that the goods will conform to some standard are created when the seller

expressly or impliedly

makes them part of the basis of the bargain in the following ways:

1. Any affirmation of fact or promise.
2. Any description of the goods
3. Any sample or model

need not use the words “warrant” or “guarantee”

the mere affirmation of the value of the goods does not create a warranty but is mere puffery.

Question 8

UCC Default Rule for Missing PRICE term

Answer 8

Reasonable Price at the time established by the contract for delivery.

Question 9

UCC Default Rule for missing TIME term

Answer 9

Reasonable time

Question 10

Default Rule under the UCC for a missing PLACE OF DELIVERY term

Answer 10

Sellers Place of Business

Question 11

Common Law Default Rule for Service and Employment Contracts

Missing Price Term

Answer 11

Reasonable value of the services rendered.

Question 12

Common Law Default Rule for Service and Employment Contracts

Missing Duration Term

Answer 12

Employment contracts in nearly every jurisdiction are AT WILL.

Employer may fire and employee may quit at any time and for any reason.

Question 13

Obligation of Good Faith and Fair Dealing

Answer 13

Good faith is defined as honesty in fact.

Question 14

Good Faith for the Merchant

Answer 14

Honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

Question 15

Open Price Term where the contract leaves open the price to be fixed by one of the parties.

Answer 15

The party must fix the price in good faith.

Question 16

Where a contract contains a satisfaction clause or similar term

Answer 16

The determination whether the party performs the obligation is satisfied must be exercised in good faith

Question 17

Situations where Open Quantity Terms will arise - list

Answer 17

Output Contracts - where buyer agrees to purchase all of a sellers output for a particular good.

Requirements Contracts - Seller agrees to provide a buyers requirements for a particular good.

Under the UCC the party entitled to determine the particular quantity of goods must make that determination in good faith

Question 18

Open Quantity - UCC - Prohibition on unreasonably disproportionate demand or tender if:

Answer 18

1. There was a Stated Estimate

2. Past course of dealing

Question 19

Ambiguous Terms - Objective vs Subjective Meaning

Answer 19

Objective meaning of the language trumps subjective meaning with 2 exceptions.

Question 20

Exceptions to the General Rule that Objective meaning trumps Subjective meaning of the terms

Answer 20

1. Where one party has reason to know the other parties subjective understanding, the first party is bound by that subjective understanding.
2. Where, at the time of contracting, both parties have the same subjective understanding, their subjective understanding will control.

Question 21

Rule of Contra Proferentem

Answer 21

If an ambiguous term is included in a contract, in case of doubt it will be construed against the drafter.

Rule applies to all contracts drafted by one of the parties regardless of bargaining power.

Question 22

Doctrine of Reasonable Expectations

Answer 22

Ambiguous terms may be construed against the drafting party if they conflict with the reasonable expectations of the parties.

Applies in principle to all contracts but mostly found in insurance contracts. Can also apply in other contracts of adhesion

Court will distinguish between dickered terms and boiler plate terms. Doctrine applies to defeat BOILERPLATE terms which are inconsistent with the reasonable expectations of the parties.

Question 23

Usage of Trade

Answer 23

Extrinsic evidence used to fill gaps and resolve ambiguities.

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 24

Course of Dealing

Answer 24

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 25

Course of Performance

Answer 25

When a PARTICULAR contact 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 26

What Prevails - Course of dealing - Course of Performance - Usage of Trade

Answer 26

Course of Performance prevails over Course of Dealing and Usage of Trade.

Course of Dealing prevails over usage of Trade

Can fill in gaps in contracts and with Course of Performance, it can establish a waiver or modification of express terms

Question 27

Parole evidence Rule covers

Answer 27

Efforts to shed light on the meaning of an agreement by providing the negotiations of the parties leading up to the written agreement.

Includes oral and documentary evidence of negotiations and other communications between the parties that took place prior to, or contemporaneously with the execution of the contract.

Question 28

What 2 questions need to be answered in a Parole Evidence Analysis

Answer 28

1. What is the purpose for which the evidence is being offered?
2. Does the evidence relate to a term in the contract which is integrated.

Question 29

Fully Integrated

Answer 29

A contract is fully integrated when the terms contained within the contract are intended to be the final expression of those terms.

Question 30

Completely Integrated

Answer 30

Parties intended the contract to represent a COMPLETE and EXCLUSIVE statement of all the terms.

Question 31

Who decides whether the terms of a contract are partially or completely integrated into a contract.

Answer 31

The judge, not the jury will decide.

Question 32

What Evidence will the judge rely on to decide whether terms are fully or completely integrated into a contract?

Answer 32

Whether there is a merger clause, the length and detail of the contract provisions themselves.

Question 33

Merger Clause

Answer 33

Clause stating the writing contains the complete and entire agreement of the parties or other words to that effect.

Effect is that the contract is Completely Integrated

Question 34

Purpose for Which Parole Evidence is offered

Answer 34

Explain or interpret terms - always allowed for this purpose

Supplement terms - allowed unless contract is completely integrated

Contradict terms - parole evidence is not allowed if the terms are integrated. Need not be completely integrated for to be barred for this purpose.

Question 35

Where Parole Evidence Rule Will Not Apply - List

Answer 35

1. Subsequent Agreements
2. Collateral Agreements
3. Attack on the Validity of the Written Agreement unless exception applies.

Question 36

Parole Evidence Rule and Subsequent Agreements

Answer 36

Rule only applies to oral or written communications made prior or contemporaneously with the execution of a written agreement.

Does not apply to agreements entered into subsequent to the execution of the written document.

Question 37

Parole Evidence Rule and Collateral Agreements

Answer 37

Parole Evidence Rule will not effect agreements that are completely distinct from the written agreement of the contract at issue.

Question 38

Parole Evidence and Attacks on the Validity of the Contract

Answer 38

Parole evidence rule applies only to valid agreements. Does not bar the use of evidence to prove the agreement is invalid and unenforceable.

Question 39

How a party can a party use parole evidence to attack the validity of the contract?

Answer 39

1. Failure of an Oral Condition Precedent to the Agreement
2. Absence of Consideration
3. Mistake or Duress
4. Fraud
5. Reformation

Question 40

Failure of an oral condition precedent

Answer 40

Evidence that the parties orally agreed to a condition precedent to the contract taking effect will not be barred by the parole evidence rule.

Question 41

Absence of consideration and Parole Evidence Rule

Answer 41

Evidence that an agreement lacks consideration or that there was a false recital of consideration is not barred.

Question 42

Parole Evidence and Fraud

Answer 42

Parole Evidence of fraud is always admissible in a majority of jurisdictions.

A minority will all admission of evidence of fraud unless the contract provides that the parties made no representations and relied on no representations during the course of making an agreement.

Question 43

Reformation - Defined

Answer 43

based on the premise that the parties reached an agreement concerning the instrument, but when reducing the agreement to writing, as a result of mutual mistake or fraud, some provision or language was omitted from, or incorrectly stated in the instrument intended to be the expression of the actual agreement of the parties.

Question 44

Reformation Requirements

Answer 44

1. There was an antecedent valid agreement
2. Incorrectly reflected in the writing by mistake or fraud
3. Proof of these elements is established by clear and convincing evidence.