Terms of the Contract

Question 1

Modification - CL

Answer 1

Modification MUST be supported by consideration.

Pre-existing Duty Rule:
- If a party offers to pay more money to the other party to guarantee completion of the contract on time, the modification will be unenforceable due to lack of consideration.
- If a party agrees to pay more money in exchange for earlier performance of the contract there will be consideration because the parties are changing their duties.

SOF: If the modified contract falls within the SOF, it must be in writing unless an exception applies.

A provision requiring a modification to be in writing even though the modification would to otherwise fall within the SOF is not enforceable.

Question 2

Modification - UCC

Answer 2

A modification does NOT require additional consideration, as long as the modification is entered into in GOOD FAITH by both parties.

SOF: If the modified contract falls within the SOF, it must e in writing unless an exception applies.

A provision prohibiting oral modifications to a sales contract is valid - even if the modification would not otherwise fall within the SOF.

Question 3

Accord and Satisfaction

Answer 3

When there is a GENUINE DISPUTE over the validity of the contract or the amount owed, a party can agree to accept a different performance from what is agreed upon in the contract.

Accord: A new agreement where a party agrees to accept a different performance than what was agreed upon.

Satisfaction: Occurs when the different performance is completed by the other party, which discharges the original contract duties and the accord agreement duties.

Question 4

Parol Evidence Rule

Answer 4

Extrinsic evidence of oral or written communications PRIOR/CONTEMPORANEOUS to the written contract are generally INADMISSIBLE for contradicting the terms of a contract.

Question 5

Total Integration

Answer 5

The writing contains all of the terms of the agreement.

No parol evidence is admissible.

Merger Clause: If a contract as a “merger clause” stating that the contract is the final and complete understanding of the parties, it is likely to be a total integration.

Question 6

Partial Integration

Answer 6

The writing contains some of the terms of the agreement.

Parol evidence is admissible to supplement the writing, as long as it is consistent with the writing (doesn’t contradict any of the terms).

Question 7

Limited Situations Where Parol Evidence Admissible

Answer 7

1) Subsequent Agreement: The PER does not prohibit evidence of modifications or statements made AFTER the contract was written.

2) Ambiguity & Interpretation: Evidence is admissible for purposes of interpreting or clarifying an ambiguity in the contract.

3) Collateral Deal: Evidence of a separate deal between the parties is admissible, if the deal is not part of the written contract.

4) UCC: Evidence of usual performance and dealing between parties is admissible.

5) Condition Precedent: Evidence of a condition precedent to the existence of the contract is admissible.