Terms of the Contract (Module 5) Flashcards
Parole Evidence Rule
Any PRIOR oral or written expressions and any CONTEMPORANEOUS oral expressions are inadmissible to vary the terms of an integrated contract
Prohibits admissibility of any extrinsic evidence that seeks to vary, contradict, or add to an integration
Integration
Two components:
1) final expression of the agreement
2) is intended to be complete/final
Evidence is admissible to show the parties’ intent
All UCC Contracts are partial integrations!
Merger Clause
Recites that teh agreement is the complete agreement of the parties
Typically determinative of final integration in large commercial K’s, but modern trend is to consider it as one factor in determining integration
Types of Evidence Outside the Scope of the P.E.R.
RV UNITS
Types of evidence permitted:
1) Reformation
2) Validity Issues
3) UCC specific
4) Naturally Omitted Terms
5) Interpretation
6) True Consideration
7) Subsequent Modifications
Reformation (P.E.R Exception)
R (Reformation) V U N I T S
Extrinsic facts to show that that a party is entitled to reformation (such as mistake)
Validity Issues (P.E.R Exception)
RV(Validity) UNITS
Extrinsic evidence is allowed to show:
1) Formation Defects
2) Oral conditions that were conditions precedent
UCC Specific P.E.R. Exceptions
RV U(U.C.C. Specific)NITS
Generally follows common law rules but can NOT add ADDITIONAL terms if:
1) There is a merger clause
2) Court determines from all the circumstances that the writing is a complete/exclusive statement of the terms
Written terms CAN be EXPLAINED by evidence of course of performance, course of dealing, and usage of trade, even if the writing isn’t ambiguous
Naturally Omitted Terms (P.E.R Exception)
RV UN(Naturally Omitted)IT
A term would naturally be omitted if:
1) it does not conflict with the written integration
2) about something that similarly situated parties would not ordinarily be expected to include
Interpretation of Ambiguous Terms (P.E.R Exception)
RV UNI(Interpretation)TS
If there’s uncertainty/ambiguity of a term in the agreement, evidence can be brought to help fact finder in reaching correct interpretation; if meaning of the agreement is plain not allowed
True Consideration (P.E.R Exception)
RV UNIT(True Consideration)S
Extrinsic evidence showing that true consideration was/wasn’t paid is allowed
Subsequent Modifications (P.E.R Exception)
RV UNITS(Subsequent Modifications)
Evidence can be introduced to show subsequent modifications of a written contract
Course of Dealing
Sequence of conduct concerning previous transactions between parties may be used to establish a common basis of their understanding
Usage of Trade
practice or method of dealing regualrly observed in a particular business
Course of Performance
If a contract involves repeated occasions for performance by either party and the other party has the opportunity to object to such performance, prior performance accepted/acquiesced to is relevant in determining meaning of the contract
Express Terms
Given greater weight than course of dealing, performance, and usage of trade
Order:
1) express terms
2) course of performance
3) course of dealing
4) usage of trade
