Terms of the Contract

Question 1

General Rules of Contract Construction

Answer 1

Contracts will be construed as a whole; words will be construed according to their “ordinary meaning”; written or typed provision will prevail over printed provisions; custom and usage of the trade; generally try to reach a determination that a contract is valid and enforceable; ambiguities are construed against the partying preparing the contract.

Question 2

Parol Evidence Rule

Answer 2

Exclusionary effect of earlier or contemporaneous agreement to a written contract as a possible source of terms of the contract.

Question 3

Corbin Test

Answer 3

Takes into account the SPECIFIC CIRCUMSTANCES OF THE TRANSACTION INVOLVED. whether parties like these, situated as they are would naturally and normally include in their writing the extrinsic matter that is sought to be introduced.

Question 4

Evidence excluded under Parol Evidence

Answer 4

evidence that seeks to vary, contradict or add to an integration

Question 5

Integration

Answer 5

An agreement in a writing with the intent that it embody the FINAL expression of their bargain

Question 6

Allowable Evidence Outside the Parol Evidence

Answer 6

Extrinsic evidence regarding formation defects, evidence showing that a contract would not become effective until a condition occurred.

Question 7

Interpretation Evidence

Answer 7

If uncertainty/ambiguity in agreement’s terms, parol evidence can be received to aid the fact finder.

Question 8

Showing of True Consideration

Answer 8

Evidence that the consideration sated in the contract was never paid, outside parol evidence

Question 9

Reformation and the Parol Evidence Rule

Answer 9

If party alleged mistake entitling him to reformation of the agreement, parol evidence is inapplicable.

Question 10

Naturally Omitted Terms Doctrine

Answer 10

A term would naturally be omitted IF: does not conflict, concerns a subject matter that parties would not ordinarily be expected to include in written instrument.

Question 11

Adding to Original Terms

Answer 11

Parol Evidence prevent a court from considering earlier agreement as a source of consistent, additional terms UNLESS THE COURT FINDS THAT THE WRITTEN AGREEMENT WAS ONLY PARTIALLY INTEGRATED

Question 12

Partial Integration

Answer 12

A final, but not complete writing

Question 13

UCC and Parol Evidence

Answer 13

Generally same rules, may add addition consistent terms unless, there is a merger clause, or court finds from all tof the circumstances that the writing was intended as complete and exclusive statement of the terms of the agreement.

Question 14

UCC PAROL EVIDENCE AMBIGUITIES

Answer 14

Written contract terms may be explained or supplemented by the following, wither or not the writing appears ambiguous.

course of dealings (previous transactions)
usage of trade (a pracice or method of dealing)
Course of performance (repeated occasions for performance)

Question 15

Knock Out Rule

Answer 15

Conflicting terms in the offer and acceptance are knocked out of the contract and the court will gap fill

Question 16

Gap Filling Terms

Answer 16

Price, Place of Delivery, Time for Shipment or Delivery, Time for Payment, Assortment

Question 17

Delivery Obligation of Seller Goods if No place has been agreed upon

Answer 17

Absent agreement, the place of the delivery is the seller’s place of business,

UNLESS BOTH PARTIES KNOW THAT THE GOODS ARE ELSEWHERE THEN THAT OTHER PLACE WILL BE THE DELIVERY POINT

Question 18

Delivery Obligation of Seller Goods Place of Delivery by Common Carrier has been Agreed Upon

Answer 18

Agreement as to the place of delivery by the common carrier

Question 19

Seller’s Obligations to Complete Delivery Obligation

Answer 19

Shipment Contract

Destination Contract

Question 20

Shipment Contract

Answer 20

Most Common look for FOB and seller’s city

Seller completes duty when:

gets goods to common carrier
makes reasonable arrangements for shipment and
notifies buyer

Question 21

Destination Contracts

Answer 21

Look for FOB another city other than seller’s city:

Seller doesn’t complete duty UNTIL goods arrive where buyer is.

Question 22

4 Risk of Loss Rules

Answer 22

Allocation by Agreement
Breach
Delivery by Common Carrier other than Seller
No allocation, no breach, no delivery

Question 23

Risk of Loss by Allocation of Agreement

Answer 23

Agreement of the parties control

Question 24

Risk of Loss Breach

Answer 24

Breaching party is liable for any insured loss even though breach is unrelated to problem

Question 25

Risk of Loss Delivery by Common Carrier

Answer 25

Risk of loss shifts from seller to buyer the time that the seller complete his delivery obligation (see: shipment/delivery contract)

Question 26

Risk of Loss, No agreement, no breach, no delivery

Answer 26

Merchant? risk of loss passed from merchant to buyer on BUYER’s RECIEPT

Not Merchant? risk of loss passes when goods are tendered.

Question 27

2A Leases Risk of Loss

Answer 27

Risk of Loss is on Lessor

Question 28

Warranties of Quality

Answer 28

Express Warranty, Implied Warranty of Merchantability, Implied Warranty of Fitness, 2A Warranties on Leases.

Question 29

Express Warranties

Answer 29

Any affirmation of fact or promise made by the seller to buyer that is part of the BASIS OF THE BARGAIN, BUYER COULD HAVE RELIED ON IT when she entered into the contract.

Question 30

Implied Warranty of Merchantability

Answer 30

Implied in every contract for the sale BY A MERCHANT; who deals in goods of that kind.

Good must be fit for the ordinary purposes for which such goods are used.

Doesn’t matter if merchant knew or did not know of the defect: absolute liability

Question 31

Implied Warranty of Fitness

Answer 31

Any seller, has reason to know the particular purpose for which the good are to be used and the that buyer is relying on the seller’s skill and judgment to select suitable goods

BUYER MUST RELY

Question 32

2A Warranties on Leases

Answer 32

Lessor of personal property makes the same warranty as a seller (Express, Merchantability, Fitness)

FINANCE LEASE - No claim against financier only supplier

Question 33

Disclaimer of Implied Warranties

Answer 33

Can be disclaimed by either specific disclaimer or general methods of disclaimer

Question 34

Warranties of Title

Answer 34

Any seller, warranties that title transferred is good, no liens or encumbrances against the title of which the buyer is unaware at the time of contracting

AUTOMATICALLY ARISES, NO NEED TO BE IN CONTRACT

Question 35

Warranty Against Infringement

Answer 35

Merchant seller regularly dealings in the goods the kind sold AUTOMATICALLY warrants that goods are delivered free from patents, trademarks or copyright claims.

BUYER WHO FURNISHES SPECIFICATIONS for goods to seller must hold seller harmless against such claims

Question 36

Disclaimer of Warranties

Answer 36

Implied Warranties, warranty of merchantability/fitness can be disclaimed either specific disclaimers or general methods of disclaimer

Question 37

Specific Disclaimers (WOM)

Answer 37

Can be specifically disclaimed or modified only by MENTIONING MERCHANTABILITY.

IF IN WRITING MUST BE CONSPICUOUS

Question 38

Specific Disclaimers (WOF)

Answer 38

Can be specifically disclaimed only by A CONSPICUOUS WRITING.

Question 39

Conspicuous Defined

Answer 39

so written, displayed or presented that a reasonable person against whom it is to operate ought to have noticed it.

Question 40

General Disclaimer Methods

Answer 40

Language used such as “AS IS” “WITH ALL FAULTS”

Examination or Refusal to Examine: if buyer BEFORE entering into the contract has examined the goods or a sample or model as fully as they desire, OR HAS REFUSED TO EXAMINE

Course of Dealing, Course of Performance, Usage of Trade