Terms Flashcards
Parol evidence rule
keeps out evidence of a prior or contemporaneous agreement (either oral or written) that contradicts a later writing.
Jennifer Lopez signs a lease for the Grand Ballroom at the Beverly Hills Hotel for her wedding. J.Lo claims she could select any ballroom and has a fax from the Beverly Hills Hotel sent before the written lease supporting her claim. If J.Lo asks the court to reform [rewrite] the contract, can she get the fax into evidence?
No, because it contradicts the final writing.
Statute of Frauds vs Parol Evidence problem
If the fact pattern tells you that the parties only orally agreed it’s a SoF problem.
Common Law Exceptions to the Parol Evidence Rule (so the evidence gets in)
- correct a clerical error;
- establish a defense against formation
- interpret a vague or ambiguous term
- add to a partially integrated writing
Before J.Lo signed the lease, the manager told her the Grand Ballroom was soundproof. It’s not. J.Lo seeks rescission because of this misrepresentation. Can J.Lo get this evidence in?
Yes, to establish a misrepresentation defense.
The lease says nothing about sleeping arrangements. J.Lo claims that before signing the lease, the manager promised to throw in the bridal suite for free. Can J.Lo get this promise into evidence?
Yes, given the k is partially integrated, because there is no contradicting evidence.
A merger clause in CL contracts
indicates the contract is completely integrated.
You cannot introduce parol evidence.
Parol Evidence forms
Can be oral or written
Partial Integration
a final statement of the terms included, but not a complete statement of all terms agreed to.
Integration MBE study tip
It’s probably the wrong answer if you see partial or complete integration in the answer…
After signing the written lease, the manager promised J.Lo that the Hotel would throw in the bridal suite for free. Does the P.E.R. prevent J.Lo from getting this promise into evidence?
No, because the bridal suite promise happened after formation of the contract.
Parol Evidence Rule and later promises
Parol Evidence Rule is irrelevant to prove later events (e.g. later promises). Do modification analysis instead.
Course of performance
How parties performed under previous installments of this contract.
The best evidence of what the parties intended
Course of dealing
what the parties did under prior contracts with each other
Usage of trade
what other in the trade do in similar contracts (least important)
Express warranty
- description of the goods
- promised facts about the goods
- showing a sample or model
- but NOT an opinion as to the goods.
Examples of express warranties
- “this ring is solid 24 kt gold”
- “this computer is guaranteed for 2 years”
- seller ues sample or model;
- NOT if seller just says all his widgets are top notch or quality
phrase the Virginia 4th Circuit held does not create an express warranty
“Good quality ladder”
Implied warranty of merchantability
Guarantee that the goods are fit for their ordinary purpose.
Type of merchant subject to the implied warranty of merchantibility
Goods merchants
VA Implied Warranty Law
the implied warranty of merchantability arises even in the sale of used product
IWM examples
You buy a bicycle from Big Wheel Cycles. There is an IWM. If Big wheels sells you a delivery van, there is no IWM.
Implied warranty of fitness for a particular purpose elements
seller knows buyer has a special purpose and is relying on the seller to select suitable goods
IWFPP and merchant status
The seller does not need to be a merchant for the implied warranty of fitness for a particular purpose to apply
Virginia warranties
Apply to leases and sales of goods
Warranty disclaimers
- A seller cannot disclaim express warranties.
- A seller can disclaim implied warranties
A contract for a machine provides that all parts are guaranteed for two years [express warranty]. What if it also provides that all warranties are disclaimed?
The express warranty is not disclaimed.
A contract for the sale of widgets uses “as is” or “with all faults”. What warranty, if any, is disclaimed?
Implied warranty of merchantability
A contract says that there are NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS instead of using a magic phrase.
Are there any implied warranties?
No. As long as the disclaimer is conspicuous, no magic language is needed.
Limitation of remedies general rule
Seller can limit buyer’s remedies for breach of any warranty (express or implied) as long as the limitation is not unconscionable.
You buy an oven for your home from Al’s Kitchen Appliances. The contract provides: All parts are guaranteed for two years [= express warranty] and Al’s liability is limited to replacement parts [= limitation of remedy; not a disclaimer]. A year later, a defect in the oven causes a fire that destroys your kitchen. Can you get damages from Al’s?
No, because you agreed to limit the remedy to only replacement parts
Remedy limited to replacement parts only. Machine catches fire, destroys your kitchen, and injures you. What can you recover?
Personal injury only.
Limitation of remedies exception
Cannot limit buyer’s remedies for personal injury in the case of consumer goods.
This is presumed to be unconscionable.
Privity of Contract Requirement- VA
VA has abolished the Privity of contract requirement for warranties
When Risk of loss is an issue
This is an issue when goods are damaged before the buyer gets them and neither the buyer nor the seller is to blame
Effect if the seller bears the risk of loss
If the seller bears the risk of loss, he must provide new goods to the buyer for no additional cost, or be liable for breach.
Effect if the buyer bears risk of loss
If the buyer bears the risk of loss, he must still pay the contract price even though the goods are destroyed.
Risk of Loss VA terminology
- In VA, carrier contracts are sometimes called Transportation contracts
- risk of loss cases not involving carriers are called Direct delivery cases
- carrier contracts are sometimes called transportation contracts
Risk of loss in shipment contracts
In order to pass risk of loss onto buyer under a shipment contract, seller must get the goods to a common carrier, make delivery arrangements, and notify the buyer.
Tested the most
Risk of loss in Destination contracts
In order to pass risk of loss onto buyer under destination contracts, seller must get the goods all the way to a specific destination
(usually where the buyer is located)
Shipment contract persumption
Risk of loss under a shipment contract is presumed unless the contract clearly indicates otherwise
FOB (Free on Board) followed by a city name
This phrase indicates the place where risk of loss transfers to buyer. FOB followed by seller’s city means it’s a shipment k.
FOB followed by any other city than the seller’s city means it’s a destination k
Risk of loss in non-carrier cases
Risk of loss in non-carrier cases depends on whether the seller is a merchant.
Merchant seller non-carrier risk of loss
Seller bears risk of loss until buyer takes possession of goods
Non-merchant seller non-carrier risk of loss
Risk of loss passes sooner: buyer bears risk of loss once seller tenders the goods (makes them available to buyer)
Performance Standard of CL contracts
Performance of CL contracts does not have to be Perfect
Substantial performance
Substantial performance (i.e. no material breaches) is all that is required to satisfy a CL contract
How to determine substantial performance
Look to terms of the k to see what the performance obligations are, and make sure the performance meets the essential purpose of the contract
Material breach and obligations
Material breach excuses the innocent party’s performance obligations
Perfect tender rule (UCC)
Seller must deliver perfect goods in the right place at the right time.
If tender is not 100% perfect, buyer may:
- Reject the goods
- accept the goods
- or accept part of the goods
Cure (UCC)
- Seller’s right to make delivery of conforming goods after previous delivery of nonconforming goods
- Seller has the option to cure when Time for performance has not expired;
- No option to cure after time for performance has expired unless there is reasonable grounds for thinking that her improper tender would have been acceptable (e.g. past kx where perfect tender wasn’t required/imperfect goods were accepted)
Installment contract (UCC)
requires or authorizes seller to deliver in separate installments
(otherwise, seller must deliver goods in a single delivery)
Installment contracts and perfect tender rule(UCC)
- Perfect tender rule does not apply to installment contracts;
- In an installment k, the buyer may reject only for substantial impairment to the value of the delivery
Implied acceptance (UCC)
Occurs when buyer keeps goods after having a reasonable opportunity to inspect them.
How to determine whether P had a reasonable opportunity to inspect the goods
Look for how long the buyer took to realize the defect.
If 2 months or more, reasonable opportunity has passed
Consequences of buyer’s acceptance (UCC)
cannot get rejection remedies, but can get acceptance remedies
Revocation of acceptance general rule (UCC)
buyer cannot revoke acceptance of goods.
Revocation of acceptance exception (UCC)
the nonconformity substantially impairs the value of the goods (no minor imperfections) and was difficult to discover
Revocation vs. Rejection
If reasonable time has passed, but revocation exception applies, you cannot reject the goods, but you can revoke your acceptance
Consequences of rejection/revocation (UCC)
- Return-Buyer can return the goods at seller’s expense.
- Refund- Buyer can get back any money buyer has paid.
- Damages- Buyer can get damages for breach of contract.
Buyer’s obligation to pay- payment method (UCC)
cash unless otherwise agreed. A check is okay, but the seller can refuse it.
