Interpretation

Question 1

Define

parol evidence rule

Answer 1

Bars admission of extrinsic evidence of prior or contemporaneous agreements or dealings that contradict/supplement the terms of integrated K’s

Question 2

Define

integrated K

Answer 2

K parties intended to be the final expression of their agreement

Question 3

Define

partially integrated K

Answer 3

K that expresses the parties final agreement about some terms, but not all terms

Question 4

Define

merger clause

Answer 4

States that K contains the complete and entire agreement of the parties.

Evidence of total integration.

Question 5

What constitutes prior dealings for the purposes of the parol evidence rule?

Answer 5

• Oral negotiations and agreements prior to contract
• Written agreements prior to contract

Question 6

Does parol evidence bar admission of subsequent agreements?

Answer 6

No, the parties may always modify the K

Question 7

When does the parol evidence rule not apply? (i.e. when you can introduce extrinsic evidence?)

Answer 7

• K was only partially integrated
• To show that K does not exist/was never formed (evidence of misunderstanding, mistake, etc)
• As defense to enforceability (duress, illegality, etc)
• To resolve ambiguities
• To prove condition precedent
• To supplement or explain terms w/ evidence of trade usage/past dealings (UCC § 2-202 - sale of goods only)
• To help court interpret K by showing parties’ subjective understanding of terms

Question 8

What is the UCC’s approach to extrinsic evidence?

Answer 8

Presumption that K’s are partially integrated; allows addition of non-contradictory terms unless the parties would have “certainly” included them (UCC § 2-202)

Question 9

What are 4 sources courts use to interpret K’s?

Answer 9

1. Express terms;
2. Course of performance;
3. Course of dealing; and
4. Trade usage

Question 10

Rank the following from most important to least important for K interpretation:

• Course of dealing
• Trade usage
• Course of performance
• Express terms

Answer 10

1. Express terms (most important)
2. Course of performance
3. Course of dealing
4. Trade usage (least important)

Question 11

Define

course of performance

Answer 11

How the parties have interacted in the CURRENT transaction

Question 12

Define

course of dealing

Answer 12

How the parties have interacted in previous transactions with each other

Question 13

Define

trade usage

Answer 13

A business custom or practice that is so common and pervasive that it is expected in regards to a certain transaction. Must be proven.

UCC § 1-205(2)

Question 14

What is the common law default rule for a missing price term?

Answer 14

Reasonable value for the services rendered

Question 15

Default common law rule for missing duration?

Answer 15

Reasonable length of time

Question 16

Default common law rule if employment K does not specify the duration?

Answer 16

Courts will presume that the employment is “at will,” meaning any party can terminate it at any time

Question 17

What is the only essential term in an UCC contract?

Answer 17

Quantity

⚠️ Exception: Requirement or output contacts do not require quantity

Question 18

What happens if a UCC K is missing essential terms such as time or price?

Answer 18

UCC § 2-305 “fills the gap” with the missing term because it is presumed the parties intended to include the term

Question 19

What is the UCC gap filler for price?

Answer 19

Reasonable market price at the time of delivery (UCC § 2-305)

Question 20

What is the UCC gap filler for time of delivery?

Answer 20

Within a reasonable time

Question 21

What is the UCC gap filler for place of delivery?

Answer 21

Seller’s place of business

Question 22

What is the UCC gap filler for time of payment?

Answer 22

Due at the time and place at which the buyer is supposed to receive the goods

Question 23

An ambiguous term will be construed against the ______

Answer 23

Drafter