K Terms

Question 1

What is the parol evidence rule (“PER”)? NOTE: NY Distinction

Answer 1

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, e.g. a lease for the ballroom that says nothing abt bridal suite)			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, so there may be a consideration or a SOF issue (if oral)]

Question 2

How is conduct relevant to K interpretation?

Answer 2

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

Question 3

In the sale of goods (Art. 2/UCC), what are the 3 types of seller warranties?

Answer 3

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")									NOTE: art appraisals = opinion too

		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...			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)

		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!

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									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)

Question 4

In the LEASE of goods (Art. 2A/UCC), what are the types of LESSORwarranties?

Answer 4

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)

Question 5

Who bears the risk of loss (ROL) in the sale of GOODS (Art. 2/UCC)?

Answer 5

Risk of loss = who bears the risk if goods are damaged/destroyed BEFORE buyer gets them? Risk = must still perform buy providing new goods (if seller bears) OR by paying K price nws loss (if buyer bears)

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 (e.g. UPS): 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)

Question 6

Who bears the risk of loss (ROL) in the LEASE of GOODS (Art. 2A/UCC)?

Answer 6

THIS IS IN NY ONLY General rule: the ROL is on the LESSOR EXCEPTION: a “finance lease” where a bank serves as a lessor (after buying from mnfr); here, the ROL is on the LESSEE