Interpretation Flashcards
Learn about: - Parol Evidence - Interpretation - Omitted and implied terms
Define
parol evidence rule
Bars admission of extrinsic evidence of prior or contemporaneous agreements or dealings that contradict/supplement the terms of integrated K’s
Define
integrated K
K parties intended to be the final expression of their agreement
Define
partially integrated K
K that expresses the parties final agreement about some terms, but not all terms
Define
merger clause
States that K contains the complete and entire agreement of the parties.
Evidence of total integration.
What constitutes prior dealings for the purposes of the parol evidence rule?
- Oral negotiations and agreements prior to contract
- Written agreements prior to contract
Does parol evidence bar admission of subsequent agreements?
No, the parties may always modify the K
When does the parol evidence rule not apply? (i.e. when you can introduce extrinsic evidence?)
- 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
What is the UCC’s approach to extrinsic evidence?
Presumption that K’s are partially integrated; allows addition of non-contradictory terms unless the parties would have “certainly” included them (UCC § 2-202)
What are 4 sources courts use to interpret K’s?
- Express terms;
- Course of performance;
- Course of dealing; and
- Trade usage
Rank the following from most important to least important for K interpretation:
- Course of dealing
- Trade usage
- Course of performance
- Express terms
- Express terms (most important)
- Course of performance
- Course of dealing
- Trade usage (least important)
Define
course of performance
How the parties have interacted in the CURRENT transaction
Define
course of dealing
How the parties have interacted in previous transactions with each other
Define
trade usage
A business custom or practice that is so common and pervasive that it is expected in regards to a certain transaction. Must be proven.
What is the common law default rule for a missing price term?
Reasonable value for the services rendered
Default common law rule for missing duration?
Reasonable length of time
