Terms Flashcards
What is the underlying premise regarding parties’ words and the parol evidence rule?
The final written version of a deal is more reliable than anything or written earlier
Integration
Written agreement that court finds is the final agreement; triggers parol evidence rule
Partial Integration
Written and final, but not complete - this is where the parties don’t intend the writing to be final even though it is not complete. (Judge decides intent)
Complete Integration
Written and final, and complete - The parties intend the written agreement to be not only final as to the terms of the agreement, but also their complete agreement. (Judge decides intent)
Merger Clause
This is the complete and final agreement;” highly persuasive, but not conclusive
Parol Evidence
A rule that may prevent terms from becoming part of the contract. It does not apply to oral or written agreements made AFTER the final writing; it NEVER EVER APPLIES TO MODIFICATION or when there is a question as to fraud or misrepresentation. (There could be a problem with the mod or it could be ok, but parol evidence still doesn’t apply!) - Look for:
- Words of parties
- Before integration (i.e., before agreement was put in written form)
- Oral or written
Reformation
Equitable action to modify written contract to reflect the actual agreement
What facts trigger the parol evidence rules?
- Integration (i.e., a written contract that the court finds is the final agreement)
- Oral statements made at the time the contract was signed or earlier oral or written statements by the parties regarding the contract
- Merger clauses
- Length of negotiations
- Length of dealings
Exceptions to the Parol Evidence Rule
- Using the earlier agreement to explain the final writing;
- Using the earlier agreement to establish a defense;
- Using the earlier agreement to show that the written contract would not become effective until a condition occurred;
- Using the earlier agreement to add to the final writing IF the court concludes that the final writing was a partial integration.
- RULE NEVER USED TO KEEP OUT EVIDENCE OF A ORAL OR WRITTEN AGREEMENT AFTER THE FINAL WRITING
What is the rule regarding parol evidence to contradict the written agreement?
Regardless of whether the writing is a complete or partial integration, the parol evidence rule precludes a court from admitting evidence of earlier statements for the purpose of contradicting the terms in the written contract; however, a court may consider the evidence for the limited purpose of determining whether there was an error in reducing the agreement to writing
Collateral Agreements
Are admissible. They are:
- agreed to for separate consideration; or
- such agreement as “in the circumstances might naturally be omitted from the writing”
* kind of the same thing as saying it’s partially integrated.
Can a court consider parol evidence for the purpose of explaining a term in the written deal?
The parol evidence rule prevents a court from admitting evidence of earlier agreements as a source of consistent, additional terms unless the court finds
- that the written agreement was only a partial integration, or
- that the additional terms would ordinarily be in a separate agreement
Confirmatory Memo and SOF
Satisfies SOF if after oral agreement one party sends the other a WRITTEN confirmation of the understanding AND:
- receiving party knows what memo concerns
- receiving party does not object to it in WRITING within 10 days.
Does parol evidence apply to oral or written statements?
BOTH - as long as they were made prior to the integration they are considered parol evidence.
What if there is a mistake in the integration?
ONLY clerical mistakes are admitted.
Otherwise, it is considered a change or contradiction to the integration and excluded.
What extrinsic evidence CAN be introduced despite PER?
Extrinsic evidence can be used to attack the VALIDITY of the K.
- Formation defects (duress, fraud) to rescind
- Conditions Precedent - oral agreement that written K does NOT become effective unless a condition happens
- Ambiguous or Uncertain terms
- To show consideration
Under PER, can you add terms to the written deal?
ONLY if:
- the integration was a partial integration
- additional terms would usually be in a separate agreement
Can conduct be used to define terms?
YES. In this order:
- course of performance in same K
- course of dealing in prior Ks
- custom and trade usage to explain terms
What is a Shipment K?
K authorizes seller to ship the goods through a common carrier.
This is the default.
What are the seller’s obligations in a shipment K?
- get the goods to the common carrier
- make reasonable arrangements for delivery
- notify buyer
Once that is settled, risk of loss passes to buyer
What is a destination K?
K where seller’s delivery obligations are NOT complete until goods reach destination.
What is FOB?
“Freight on Board”
FOB - seller’s city - means shipment K.
FOB - any other city (including buyer city) - means destination K.
What is common carrier delivery risk of loss?
The risk of loss shifts to the buyer is soon as the seller has completed his delivery obligations.
Risk of Loss for Sale Not Involving Common Carrier Shipment
Merchant seller - risk of loss shifts to buyer when buyer receives goods.
Non-merchant seller - risk of loss shifts to buyer as soon as the seller makes the goods available.
