Terms of the K

Question 1

General Rules (6)

Answer 1

(1) Ks are construed as a “whole,” i.e. its overall intent
(2) Words are construed according to their ordinary meaning
(3) Written or typed provisions will prevail over printed provisions
(4) Courts generally try to reach a determination that a K is valid and enforceable
(5) Ambiguities in a K are construed against the party who prepared it

Question 2

Conduct as a source of interpreting terms (hierarchy)

Answer 2

(1) Course of previous performance under installments of THIS K
(2) Course of dealing under prior Ks
(3) Trade usage/custom in the business

Question 3

Modification (CL vs. UCC)

Answer 3

CL: (1) A modification must be supported by new consideration. (2) A written K can be modified orally even if contrary to a provision. (3) Modern approach permits modification w/o consideration if (1) it’s due to circs that were unanticipated by the parties at K formation and (2) it’s fair/equitable.

UCC: (1) No consideration if made in GF. (2) Must be in writing, if as modified, it falls within SOF. (3) Provisions prohibiting oral modification are given effect.

Question 4

Parol Evidence Rule (3 elements)

Answer 4

(1) Prior or contemporaneous expressions (2) are inadmissible to vary, modify, or contradict (3) an integrated agreement intended to be the complete and final expression of the parties’ agreement.

Question 5

If integration is complete vs. partial + merger clauses

Answer 5

If complete: writing cannot be contradicted OR supplemented
If partial: writing may not be contradicted, but if may be supplemented by providing consistent, additional terms
Merger clause: generally a factor to consider in determining integration (but in large commercial Ks, it’s determinative)

Question 6

Exceptions to the PER that may be admitted:

Answer 6

(1) Correct a clerical error (typo)
(2) Establish a defense against formation: (i) Formation defenses or (ii) conditions precedent
(3) Collateral agreement / naturally omitted term
(4) Interpret a vague or ambiguous term
(5) Showing true consideration
(6) Add to a partially integrated writing
(7) Reformation action
(8) Subsequent modifications of a writing

Question 7

UCC PER:

Answer 7

UCC presumes writings are partially integrated unless parties intended it to be complete. Parol evidence can’t be used to contradict, but can be used to add consistent, additional terms unless (1) merger clause or (2) courts find from all the circs that the writing was intended as a complete integration.

Question 8

UCC Gap Fillers

Answer 8

Quantity is a material term that always must be included. Gap fillers for other terms:

(1) Price: filled with reasonable price at time of deliver
(2) Place of deliver: filled with S’s place of business (if he doesn’t have one, his home)
(3) Time for shipment or deliver: filled with reasonable time
(4) Time for payment: payment due at time and place at which B is to receive the goods
(5) Assortment: if unspecified, B chooses

Question 9

Implied Warranty of Title and Against Infringement

Answer 9

Title: S warrants good title
Infringement: merchant S warrants goods are delivered free of any patent, TM, etc.

Question 10

Implied Warranty of Merchantability

Answer 10

Implied in every K for sales by a merchant who deals in goods of the kind sold: warrants that the goods are merchantable, i.e. fit for their ordinary purpose/use

Question 11

Implied warranty of Fitness for a particular purpose

Answer 11

Implied in a K for sale of goods where (1) B is relying on S’s judgment to select suitable goods for a particular purpose, (2) B in fact relies on S’s judgment, and (3) S knows about B’s particular purpose. Applies to ALL sellers.

Question 12

Express warranties

Answer 12

Any (1) fact/promise, (2) description, or (3) sample/model creates an express warranty if it was part of the basis of the bargain (i.e. B COULD have relied on it when entering the K). A statement relating to value of goods or opinion is not a warranty.

Question 13

Disclaimer of Warranties: General Rule

Title, merchantability, fitness for particular purpose

Answer 13

A S can disclaimed implied warranties, but generally not express warranties.
Title: can be disclaimed by specific language/circs showing S does not claim title.
Merchantability: disclaimer must mention “merchantability.” If in writing, must be conspicuous. Can also be disclaimed by “as is,” refusal to examine, or course of dealing, with all faults –> sufficient on MBE
Fitness: can be disclaimed only by conspicuous writing or general disclaimer (“as is,” refusal to examine, or course of dealing)

Question 14

Limitations on B’s remedies for breaches of warranties

Answer 14

OK unless unconscionable (e.g. disclaimer limiting damages for PI caused by a breach of warranty on consumer goods)

Question 15

Buyer’s Remedies for breaches of warranties

Answer 15

Generally: Difference between value of the goods delivered and the value of the goods as warranted (+ consequential and incidental)

Breach of title: if goods are reclaimed by true owner, B may rescind, revoke acceptance, or sue for damages (value of goods as warranted)

Question 16

Risk of loss in a sale of goods: If S bears risk vs. B

Answer 16

If S bears risk, S must provide new goods to B for no additional cost or be liable for breach. If B bears the risk, B must pay K price. If the K allocates risk, K controls. If a party breaches, breaching party bears risk even if breach doesn’t relate to why goods were destroyed.

Question 17

Deliver by common carrier, e.g. UPS: Shipment Ks vs. Destination Ks

Answer 17

Shipment Ks: S must (1) make a K with a carrier, (2) get the goods to the carrier, (3) notify B of shipment, and (4) provide B with docs needed to get the goods. Risk of loss passes to B when the goods are delivered to the carrier.

Destination K: S must get the goods to a particular destination. Risk of loss passes to B when the goods are tendered to the B at the destination.

Note: FOB or FAS followed by “location”: if location is the S’s city, it’s a shipment K. If location is any other city, it’s a destination K.

Question 18

Non-carrier delivery

Answer 18

If S is a merchant, risk of loss passes to B only when she takes possession of goods

If S is not a merchant, risk of loss passes to B upon tender of delivery (when the goods become available to B)

Question 19

Goods destroyed before risk of loss passes

Answer 19

If goods that were ID’d when the K was made are destroyed (1) without fault of either party and (2) before risk passes to B, the K is voided (S’s performance is excused). If goods were NOT ID’d until AFTER K was made, S would have to prove impracticability to be discharged.