Parol Evidence/ Interpretation Flashcards
What is an Integrated Agreement? (§ 209)
A writing or writings constituting a final expression of one or more terms of an agreement.
What is a Completely Integrated Agreement? (§210)
An integrated agreement adopted by the parties as a complete and exclusive statement of the terms of the agreement.
What is a Partially Integrated Agreement?
Only additional terms that are consistent with the original document get in (courts decide upon consistency).
Exceptions to the Parol Evidence Rule
- Fraud/Mistake
- Formation defects (lack of offer, acceptance, consideration, certainty)
- Pre-contractual defenses (capacity, undue influence, duress,
misunderstanding)
- UCC (course of dealing, course of performance, trade usage)
- Condition precedent to formation
- Collateral agreement (different agreement to something else)
Merger Clause
Purpose is that the clause is a statement of complete integration. That the writing is final and complete and which the parties have “adopted.” General Rule: Merger clauses are binding.
Collateral Agreements
The fact that the parties have adopted a writing as an integration of one agreement has, of course, no effect on another, entirely separate agreement. Is such an agreement as might naturally be made as separate agreement by parties situated as were the parties to the written contract
Course of Dealing
How did they act in previous contracts?
Course of Performance
How did they act in the current contract?
Trade Usage
How a particular industry will deal with a specific issue/term.
Can extrinsic evidence be used? (NY)
A more restrictive approach. If the language is clear no extrinsic evidence is allowed, however, if the language is ambiguous extrinsic evidence may be allowed.
Can extrinsic evidence be used? (CA)
Even if the language is clear or ambiguous extrinsic evidence may be allowed. The court will allow extrinsic evidence if it helps prove the intents of the parties. Read as broad as possible.
Interpretation First Step
Plain Meaning Rule- what is the plain meaning of the word?
Difference between P/E and Interpretation?
P/E word is not in the K Interpretation word is already in
Who is contractual ambiguity held against?
The drafter, because should of used more clarity
Different ways to interpret contract
- Plain meaning - Language of K: how is word used (may help with intent) - Preliminary Neg. - UCC (trade usage, course of dealings, course of perf.) - Economic terms: assume person wants to make profit
Mistake vs Misunderstanding
- Mistake: There is a K, enforceable, but voidable. - Misunderstanding: No MUTUAL ASSENT, parties do not understand terms of K correctly, NO K. (Unless 1 party knows or should know of the others misunderstanding).
Implied Warranty: Merchantability; Usage of Trade
Even if not applied in K, still part of K. -Use obj. std if item being used for ordinary purpose - particular purpose: what is customiarly used by public at large
Implied Warranty: Fitness for Particular Purpose
For a specific purpose, where the seller knows
How to Exclude Implied Warranties?
Parties must agree that the implied warranties do not apply to goods.
Implied Warranties
UCC applies in sale of goods unless parties agreed that they do not,
Parol Evidence Rule
A rule that precludes any proof that the terms of the contract are other than as expressed in the writing (only applies when there is a writing).
Ask these things to determine if P/E evidence applies:
- Do we have a written agreement? 2. Do the parties want the parol evidence rule to apply? 3. Do we have a partial integration or a complete integration? 4. How do we tell if we have a partial integration or a complete integration?
When does the PER apply?
PER applies when an agreement is recorded in writing. One party to the agreement attempts to introduce extraneous evidence (usually oral) to expand on a term of the contract.
Steps for PER
(1) Is it a writing? (2) Is there a merger clause If merger clause (easy case) Some Courts put it aside (Minority View) • Only put aside for high volume consumer transactions (Majority View) (ATT) b. If no merger clause (hard case) (3) Intent of the Parties a. Normally and Naturally b. Collateral, Does not Contradict Express or Implied Terms, Not Ordinarily Expected to be Included
Difference between Vague and Ambiguous
Vague: Don’t know its meaning Ambiguous: Has 2 or more meanings
Agreement (§3)
Manifestation of mutual assent on the part of two or more persons
Does the PER preclude oral modifications after the adoption of the written agreement?
No, the PER have no effect on evidence of oral modification that the parties may have made after their adoption of the written version of the K.
General Rule for New Market Entrant
His acceptance of the standard must be made to appear, by proving either that he had knowledge of the usage, or the usage is so generally known in the community that his actual individual knowledge of it may be inferred. (Reasonable Time = 1 year)
Maxims (Interpretation of Statutes and Contracts)
Ejusdem Generis - Of the same kind
Expressio Unius Est Exclusio Alterius - The expression of one thing is the exclusion of another
Noscitur A Sociis - It is known from its associates
Contra Proferentem - Against its author or profferer
Patent v. Latent ambiguous terms
Patent: use interpenetration (reasonable person std) Latent ambiguity: rescind K is a remedy
Ejusdem generis
Of the same kind
expressio unius est exclusio alterius
the expression of one thing is the exclussion of another
contra proferentem
against its author or profferer
No Oral Modification Clause
Where the parties state “No oral modification can be made, must be in writing.” Freedom of contract allows parties to change and make oral contract modifications if both parties accept.
noscitur a sociis
it is known from its associates
Condition precedent before formation of K
Must do something before a contract is formed
Restatment 216 Consistent Additional Terms
an agreement is not completly intergrated if the writing omits a consisent additional agreed term which is
a) agreed to for separate considertion; or
b) such term as in the circumstances ight naturally be omitted from the writing.
Mitchell Test
collateral agreement: an independent agreement must be 3 things
1) agreement must be collateral
2) must not contradict express or implied provisions of the written contract;
3) it must be one that parties would not ordinarily be expected to embody in the writing
Gianni Test
Would certain terms be included normally and naturally in K?
If Yes then PER bars it.
If no then allowed.
Reformation
Courts re-write the K
Amendment
parties add or change K
Applies to
