Midterm Review Flashcards
Rule for Ambiguity
A term is ambiguous when it is reasonably susceptible to more than one meaning.
Plain Meaning Rule
When interpreting possible ambiguity in a contract, a court will first start with the four corners of the contract and determine whether the ambiguity can be resolved by analyzing the terms of the contract and any documents referenced within it.
Ambiguity Can Negate Mutual Assent
In the event each party: 1) attaches materially different meanings to a particular term, and 2) neither knows or has reason to know the meaning attached by the other, or 3) each party knows or has reason to know of the meaning attached by the other, courts will find that the parties have not mutually assented to the contract, thereby resulting in the contracts unenforceability.
Weight of Evidence
A party seeking to prove a term with an objectively understood meaning has a different meaning in the context of the contract has the burden of proving the different meaning is what the parties intended.
Interpretation against the Drafter
A party will be charged with a term’s meaning advanced by the other party if: 1) the first party was entirely responsible for drafting the term at issue and 2) the other party had no input into the negotiation and drafting process.
Reason to Know of Another’s Meaning:
A party will be charged with a term’s meaning advanced by the other party if the other party: 1) Does not know or has no reason to know of a different meaning other than their own and 2) the first party knows or has reason to know of the other party’s intended meaning.
Parol Evidence Rule
Evidence of a prior or contemporaneous agreement is not admissible to contradict the terms of an integrated contract. But such evidence may be admissible to show that the contract is not integrated or only partially integrated.
Partially Integrated
An agreement is partially integrated where it fully and completely states the parties’ agreement with respect to a discrete part of their agreement or is complete with respect to some terms but not all. Evidence of prior or contemporaneous agreements as well as other extrinsic evidence is admissible to aid in interpreting ambiguity where the meaning advanced is consistent with the written terms of the partially integrated agreement.
Completely Integrated
An agreement is completely integrated where it fully and completely states the entirety of the parties’ agreement with respect to the particular subject matter at issue. All extrinsic evidence is barred from admission under common law if the court finds that the agreement is completely integrated. However, extrinsic evidence, including evidence of prior and contemporaneous agreements, is always admissible to show either that: 1) the agreement is not completely or partially integrated 2) a defense exists that would invalidate the contract; 3) a condition exists which affects performance of the contract; or 4) the parties intended an objectively ambitious term to create a specific meaning. Under the UCC, evidence of the parties’ course of dealing, course of performance, and usage of trade is always admissible to show an agreement consistent with the written terms of a completely integrated agreement, or to explain or supplement those terms.
Determining Integration
In order to determine whether the parties intended a writing to be the complete and final expression of their agreement, courts will examine the intent of the parties from all circumstances, including their language and conduct, and no written document is sufficient, standing alone, to determine whether a writing is partially or completely integrated.
Restatement Second of Contracts § 224
Condition Defined
A condition is an event, not certain to occur, which must occur, unless it’s non-occurrence is excused, before performance under a contract becomes due.
WHAT’S A MERCHANT?
“MERCHANT” MEANS A PERSON WHO DEALS IN GOODS OF THE KIND OR OTHERWISE BY HIS OCCUPATION HOLDS HIMSELF OUT AS HAVING KNOWLEDGE OR SKILL PECULIAR TO THE PRACTICES OR GOODS INVOLVED IN THE TRANSACTION(UCC 2-104
UCC § 2-313. Express Warranties by Affirmation, Promise, Description, Sample
(1) Express warranties by the seller are created as follows:
(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.
(2) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.
UCC § 2-312 Warranty of Title…
(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that
(a) the title conveyed shall be good, and its transfer rightful; and
(b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.
(2) A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.
(3) Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.
UCC § 2-314 Implied Warranty: Merchantability: Usage of Trade
(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
(2) Goodsto be merchantable, must be at least such as
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promise or affirmations of fact made on the container or label if any.
(3) Unless excluded or modified (Section 2-316) other implied warranties may arise from course of dealing or usage of trade.
