Terms of the Contract

Question 1

What is parol evidence?

Answer 1

Words of the parties not in the written contract (said before or contemporaneously with the agreement to the contract)

Question 2

What are the triggering facts for the parol evidence rule?

Answer 2

Final written contract and earlier words of one or both parties

Question 3

What is the underlying policy regarding the parol evidence rule?

Answer 3

The final version of a deal/contract is more reliable than anything said or written earlier.

Question 4

The Parol evidence rule is like an evidence rule in the sense that?

Answer 4

1) the issue is whether parol evidence is admissible and 2) admissiblity often depends on the purpose for which the evidence is being introduced.

Question 5

What is an integrated contract?

Answer 5

Written agreement that courts find is the final agreement.

Question 6

What is partial integration of a contract?

Answer 6

Written and final contract, but not complete

Bar exam pro-tip: See this on MBE it is wrong

Question 7

What is complete integration?

Answer 7

Written and final contract, that is complete

Bar exam pro-tip: See this on MBE it is wrong

Question 8

What is a merger clause? What is its effect on integration?

Answer 8

A contractual clause saying “This is the complete and final agreement”. The merger clause is persuasive evidence of integration but not conclusive.

Question 9

What constitutes parol evidence?

Answer 9

Oral OR written words of a party before integration

Question 10

Can parol evidence be used to change or contradict terms in the written deal?

Answer 10

No. Evidence of earlier agreements is not admissible for the purpose of contradicting the terms of a written contract.

Question 11

What is the result of a clerical mistake in integration?

Answer 11

This is a mistake in integration. Parol evidence is admissible for the limited purpose of determining whether there was a mistake in the integration.

Question 12

S contracts
in writing to sell B 1,000 chickens a month for 12 months. When S limits
deliveries to 1,000 chickens a month, B sues for breach of contract. B claims that
S told him just as they were signing the contract that S would deliver as many
chickens as B needs during the 12-month contract term, and offers evidence of
pre-contract telefaxes from S supporting this claim. Can the court admit this
evidence that changes/contradicts the terms of the contract?

Answer 12

No. cannot use parol evidence to contradict or change an integrated contract.

Question 13

Is parol evidence admissible for the purposes of proving defenses?

Answer 13

Yes. And, regardless of whether the writing is a complete or partial
integration, the parol evidence rule does not prevent a court from
admitting evidence of earlier words of the parties for the limited
purpose of determining whether there is a defense to the
enforcement of the agreement, such as misrepresentation, fraud, or
duress.

Question 14

Is parol evidence admissible for resolving ambiguity in contracts?

Answer 14

Yes. Regardless of whether the writing is a complete or partial
integration, the parol evidence rule does not prevent a court from
admitting evidence of earlier agreements to resolve ambiguities in
the written contract.

Question 15

Can you use parol evidence to add to written deals?

Answer 15

The parol evidence rule prevents a court from admitting evidence of
earlier agreements as a source of consistent, additional terms
unless the court finds (i) that the written agreement was only a
partial integration or (ii) that the additional terms would ordinarily be
in a separate agreement.

Question 16

How can conduct be used as a source of contract terms?

Answer 16

Course of performance-same people; same contract
Course of dealing-same people; different but similar contract
Custom and usage-different but similar people, different but similar contract.

Question 17

How does a seller of goods complete his delivery obligation in a shipment contract? As an aside, what law governs?

Answer 17

UCC governs: (i) gets goods to common carrier, (ii) makes reasonable arragnements for delivery, and (iii) notifies the buyer.

Question 18

How does a seller of goods complete his delivery obligation in a destination contract? As an aside, what law governs?

Answer 18

UCC governs: The seller will not complete his delivery obligation until the goods arrive at the destination.

Question 19

How do you differentiate between a shipment contract and a delivery contract?

Answer 19

Look at FOB. FOB (City seller is in)=shipment contract. FOB (ANY OTHER CITY)=destination contract

Question 20

When does a risk of loss problem arise?

Answer 20

Where (i) after the contract has been formed, but before the buyer receives the goods, (ii) the goods are damaged or destroyed, and (iii) neither the buyer nor the seller is to blame.

Question 21

What are the possible consequences in a risk of loss problem?

Answer 21

If the risk of loss is on the buyer, he must pay the full contract price for the lost or damaged goods. If it is on the seller, he has possible liablility for nondelivery.

Question 22

What are the risk of loss rules?

Answer 22

1) Agreement of the parties controls
2) Breach: breaching party is liable for any uninsured loss even though breach is unrelated to the problem
3) Common carrier delivery: risk of loss shifts from seller to buyer at the time the seller completes delivery obligation
4) Catch-all: Risk of loss shifts from a merchant-seller to the buyer on the buyer’s receipt of the goods (leaves physical possession); risk of loss shifts from a nonmerchant seller when he or she “tenders” the goods (makes available)

Question 23

B buys a stove from S, a used appliance dealer. S tells B that he can pick up the
stove at the loading dock. Before B can drive his truck to the loading dock,
lightning strikes the stove. Does B have to pay for the damaged stove?

Answer 23

NO. Risk of loss shifts from merchant to buyer on buyer’s receipt of goods.

Question 24

B, a used appliance dealer, buys a used stove from S. S tells B to pick up the
stove at his convenience that the stove is on S’s back porch. Later, vandals
damage the stove before B gets it. Does B have to pay for the damaged stove?

Answer 24

Assume not a merchant, this is a tender because S made it available and B does have to pay for the damaged stove

Question 25

What is an express warranty of quality?

Answer 25

Words that promise, describe, or state facts. Distinguish from sales talk which is more general, an opinion.

Question 26

Which is not an express warranty? All steel? Top quality? Guaranteed to operate for two years? A sample.

Answer 26

Top quality.

Question 27

What is the implied warranty of merchantability?

Answer 27

A seller is a merchant that deals in goods of that kind, warrants that the goods are fit for ordinary purposes for which they are used.

Question 28

Does the implied warranty of merchantability attach to all contracts with a merchant?

Answer 28

Yes.

Question 29

What is the implied warranty of fitness for a particular purpose?

Answer 29

A buyer has a particular purpose for a good, the buyer relies on the seller to select suitable goods, and the seller has reason to know of the purpose and reliance. The seller impliedly warrants that the goods are fit for that particular purpose.

Question 30

What are the four limitations on warranty liability?

Answer 30

1) Statute of limitations
2) Privity
3) Buyer examination of the goods
4) Disclaimers

Question 31

What is the statute of limitations for warranty liability?

Answer 31

Four years. Starts running when the tender of delivery is made.

Question 32

When does a buyer’s examination of the goods limit warranty liability?

Answer 32

When an examination would produce defects that are obvious.

Question 33

What is the effect of disclaimers on warranties, both implied and express?

Answer 33

Express warranties cannot be disclaimed. Implied warranties can be disclaimed through conspicuous language including the word MERCHANTABILITY, or “as is”, “with all faults”

Question 34

B buys a big screen television “as is” from S TV Store. Shortly after B turns the
television on in her home, it explodes. Can B sue S for breach of the implied
warranty of merchantability?

Answer 34

No the words “as is” are a disclaimer relieving implied warranties of merchantability.

Question 35

Can you set a limitation of remedies for warranties?

Answer 35

Yes, even for express warranties. The test is unconscionability. Prima facia unconscionable if consumer goods cause personal injury.