Terms of the Contract Flashcards
Describe the underlying premise of the parol evidence rule.
The underlying premise is that the final written version of a deal is replaced by earlier agreements, negotiations, and conversations.
What is a shipment contract? When does the seller complete its delivery obligation?
In a shipment contract, the seller completes its delivery obligation before delivery is completed.
The seller completes its delivery obligation when it:
(i) Gets the goods to a common carrier, and
(ii) Makes reasonable arrangements for delivery, and
(iii) Notifies the buyer.
What is a destination contract?
The seller does not complete its delivery obligation until the goods arrive at the destination. (Watch for F.O.B. followed by a city where the seller is or where goods are means shipment contract; F.O.B. followed by any other city means destination contract.)
In a shipment or destination contract, what is the result if the risk of loss is on the buyer? seller?
If the risk of loss is on the buyer, he has to pay the full contract price for the lost or damaged goods. If the seller has the risk of loss, no obligation on the buyer and possible liability on the seller for nondelivery.
What are the risk of loss rules?
None involve title. TItle is irrelevant. Apply rules in descending order.
(1) Agreement: Agreement of the parties controls
(2) Breach: Breaching party is liable for any uninsured loss even though breach is unrelated to problem.
(3) Common Carrier Delivery: Risk of loss shifts from seller to buyer at the time the seller completes its delivery obligations.
(4) “Catch-all:” The determining factor is whether the seller is a merchant. Whether the buyer is a merchant is irrelevant. Risk of loss shifts from a merchant-seller to the buyer on the buyer’s “receipt” of the goods; risk of loss shifts from a nonmerchant seller when he or she “tenders” the goods.
What are the warranties of quality?
(1) Express Warranty (e.g. “all steel”)
(2) Implied Warranty of Merchantability
(3) Implied Warranty of Fitness for a Particular Purpose
What is an express warranty?
Promises or descriptions or stated facts about the good. Distinguish from sales talk which is more general, an opinion.
What is an implied warranty of merchantability?
When a person buys any goods from any merchant, a term is automatically added to the contract by operation of law– that the goods are fit for ordinary purpose for which such goods are used. Triggering fact: Seller is a merchant, which means that it is in the business of selling goods of that kind. The warranty is that goods are fit for ordinary purposes.
What is an implied warranty of fitness for a particular purpose?
Buyer has particular purpose buyer is relying on seller to select suitable goods; seller has reason to know of purpose and reliance. The warranty is that the goods are fit for a particular purpose.
Can warranties be disclaimed?
Express warranties generally cannot be disclaimed. Implied warranties of merchantability and fitness can be disclaimed by either: (1) Conspicuous language of disclaimer, mentioning merchantability, OR (2) “As is” or “with all faults”
What are the limitations on warranty liability?
(a) Statute of Limitations. There is a four-year statute of limitations, and generally the statute starts running on possible warranty actions when the “tender of delivery is made,” not when the buyer learns that the product is defective. (b) Privity. Privity of contract means that the plaintiff contracted with the defendant. If the plaintiff did not buy the goods from the defendant, there is a possible lack of privity issue. There is a division among states as to how to resolve lack of privity issues. Your state materials will explain the privity law in your state if lack of privity is a possible state essay issue. (c) Buyer’s examination of the goods. Look for a fact pattern that tells you that the buyer has examined the goods. There are no implied warranties as to defects which would be obvious on examination. (d) Disclaimer – e.g., “there are no warranties:” Remember express warranties generally cannot be disclaimed. Implied warranties of merchantability and fitness can be disclaimed by providing CONSPICUOUS language of disclaimer, mentioning merchantability, OR by stating “as is” or “with all faults.”
In terms of warranties, what is the limitation of remedies when there is a breach of warranty?
Does not eliminate warranties, simply limits or sets recovery for any breach of warranty: (a) possible to limit remedies even for express warranties. (b) general test is unconscionability. (c) prima facie unconscionable if breach of warranty on consumer goods causes personal injury.
In regards to the parol evidence rule, what is an integration? partial integration? complete integration? merger clause? parol evidence?
(a) Integration: Written agreement that court finds is the final agreement, triggers the parol evidence rule. (b) Partial integration: Written and final, but not complete. (c) Complete integration: Written and final and complete. (d) Merger clause: Contract clause such as, “This is the complete and final agreement.” (e) Parol evidence: Words of party (or parties); Before integration, i.e., before agreement was put in written Form; Oral or written.
What is the rule regarding changing or contradicting terms for the parol evidence rule?
Evidence of earlier agreements cannot be considered for the purpose of contradicting the terms in the written contract. General rule is that you cannot use parol evidence to change or contradict the terms.
What is the rule regarding mistake in integration for the parol evidence rule?
Mistake in integration, i.e., clerical mistake: A court may consider evidence of such terms for the limited purpose of determining whether there was a mistake in integration, i.e., a mistake in reducing the agreement to writing.
