K Terms Flashcards
What is the parol evidence rule (“PER”)? NOTE: NY Distinction
PER keeps out evidence of a PRIOR or CONTEMPRANEOUS agreement (either oral OR written) that contradicts a later writing NOTE: a PER problem REQUIRES a writing, so if the fact pattern involves an oral agmt, it’s a SOF problem, NOT a PER problem
EXCEPTIONS (where evidence gets in)
1) to correct a CLERICAL ERROR (e.g. a typo)
2) to establish a DEFENSE against formation (e.g. fraud, duress, mistake, illegality, CONDITION PRECEDENT by extrinsic evidence) 3) to interpret a VAGUE or AMBIGUOUS term (but NOT for a term that has a plain/ordinary meaning)
4) to supplement/add to a PARTIALLY integrated writing (a final stmt of the terms included, but not a COMPLETE stmt of terms agreed to) NOTE: if there is a “merger clause” then this strengthens the PRESUMPTION that agmt is complete but is not conclusive
NOTE: the PER has NOTHING to do w/ what happens AFTER an agmt is reduced to writing; so such info MAY NOT be kept out (this is a modification)
How is conduct relevant to K interpretation?
Conduct can…
1) Explain words in the K
2) Fill gaps in the K
Order of importance of conduct:
1) Course of performance: what parties have done under THIS K; this is the BEST evidence 2) Course of dealing: what these parties have done under PRIOR Ks with each other
3) Usage of trade (custom): what is the custom in the INDUSTRY in similar Ks; this is the furthest removed from the K
In the sale of goods (Art. 2/UCC), what are the 3 types of seller warranties?
1) Express warranty: a seller is LIABLE for breach of an express warranty, which can be created by (i) stmts of fact; (ii) promises; (iii) description of the goods; (iv) use of a sample or model product (i.e. you DON’T have to use the word “warranty”)
BUT NOT opinions/general subjective stmts (e.g. “all our products are top quality”)
In order for stmt to = an express warranty, it must be a “basis of the bargain” (i.e. if the buyer COULD have relied on the stmt)
2) Implied warranty: TWO types
(i) Implied warranty of merchantability = warranty that the goods are fit for their ORDINARY PURPOSE Key fact: Seller needs to be a “dealer” (i.e. a merchant(and ONLY a merchant) who has SPECIALIZED knowledge abt the PARTICULAR goods in the trxn)
(ii) Implied warranty of fitness for a PARTICULAR purpose = a warranty that the goods are fit for a PARTICULAR PURPOSE Key facts: Seller (i) KNOWS the buyer has a special use for the good; AND (ii) buyer is RELYING ON THE SELLER to pick out goods suitable for that use NOTE: ANY seller can make an implied warranty of fitness, merchant or not!
In the LEASE of goods (Art. 2A/UCC), what are the types of LESSORwarranties?
THIS IS IN NY ONLY
General rule: Same warranties under UCC/Art. 2A as under Art. 2 (i.e. express warranty, merchantability, fitness)
EXCEPTION: a “finance lease” where a bank serves as a lessor (after buying from mnfr); here, the warranty is ONLY operating by original mnfr.)
Limitation on warranty are the SAME as with a sale of goods (Art. 2/UCC) (i.e. disclaimer OR ltd of buyer’s remedies)
Who bears the risk of loss (ROL) in the sale of GOODS (Art. 2/UCC)?
Risk of loss = who bears the risk if goods are damaged/destroyed
HIERARCHY: look for the following things in the ORDER listed…
1) Agreement: the agreement of the parties cntrls as to who shall bear the ROL
2) Breach: the breaching party bears ROL, EVEN IF the loss is unrelated to the breach Defective goods: if buyer properly rejects them, the ROL does NOT pass to buyer until the goods are cured/accepted
3) Delivery by a common carrier: ROL SHIFTS to buyer when seller completes its DELIVERY OBLIGATION,WHICH depends on type of K.
Shipment K: seller must (i) TRANSPORT goods to a common carrier; (ii) maker delivery ARRANGEMENTS; AND (iii) NOTIFY buyer HERE, buyer bears ROL even before he gets the goods
A K is PRESUMED a shipment K, unless otherwise stated
Destination K: seller must (i) TRANSPORT goods to a SPECIFIC location (usually, where buyer is located)
LOOK for “Free on board” (FOB) often followed by city/place The ROL passes to the buyer AT the named location… If it’s “FOB [city where SELLER is located]”, then it’s a SHIPMENT K If it’s “FOB [any other city]”, then it’s a DESTINATION K
4) Non-carrier cases (e.g. buyer pick up or seller personal delivery): ROL depends on whether seller is a MERCHANT…
Merchant seller: seller bears ROL until buyer takes POSSESSION of the goods
Non-merchant seller: ROL passes to buyer ONCE seller makes the goods AVAILABLE to the buyer (i.e. the seller “tenders” the goods)
Who bears the risk of loss (ROL) in the LEASE of GOODS (Art. 2A/UCC)?
THIS IS IN NY ONLY
General rule: the ROL is on the LESSOR
EXCEPTION: a “finance lease” where a bank serves as a lessor; here, the ROL is on the LESSEE
How may a seller limit warranties?
LIMITATIONS on warranties…
1) Disclaimers: a seller CAN disclaim an implied warrant, BUT CANNOT DISCLAIM an express warranty
To disclaim an IMPLIED warranty, K must provide “magic words” (i.e. “as is”; OR “with all faults”)OR by CONSPICUOUS disclaimer Note: To disclaim merchantability, must use the word “merchantability” in disclaimer (NOT the case with fitness)
2) Ltd of Buyer’s Remedies: a seller CAN LTD a buyer’s remedies for breach of ANY warranty (express OR implied) if the ltd is NOT UNCONSCIONABLE EXCEPTION: ltd buyers remedy for PERSONAL INJURY is presumed unconscionable (rebuttable)
