Terms of the K

Question 1

parol evidence rule

Answer 1

• when BOTH parties to a K express their agreement in a WRITING with intent that it embody final expression, it’s an integration
• any other expressions (written or oral) made BEFORE writing and any oral expressions contemporaneous with writing are inadmissible to vary terms of writing

NOTE: PER does NOT APPLY to statements made AFTER WRITING COMES INTO EXISTENCE; does not apply to subsequent modifications of agreement

Question 2

partial integration

Answer 2

• PARTIAL INTEGRATION: writing may not be contradicted but MAY BE SUPPLEMENTED by proving CONSISTENT ADDITIONAL TERMS (so extrinsic evidence can be allowed if K was only partially integrated)
• under UCC, all writings are partial integrations

Question 3

effect of merger clause

Answer 3

merger clause recites that the agreement is the complete agreement

it’s one factor in determining integration

Question 4

extrinsic evidence outside scope of PAROLE EVIDENCE RULE
(VIS)

Answer 4

other forms of evidence can be admitted if they don’t vary terms of writing

• validity issues (party to written K can attack agreement’s validity–formation defects like fraud or illegality; to show condition precedent to the existence of a K)
• interpretation (if there’s uncertainty in written agreement’s terms or dispute re meaning, parol evidence can be received to help fact finder)
• subsequent modifications (parol evidence can be offered to show modifications made after writing)

Question 5

evidence of additional terms under Article 2

Answer 5

• party can’t contradict a written K but may add CONSISTENT additional terms… unless courts find that writing was intended as complete
• art 2 also says written K’s terms can be explained or supplemented by evidence of: course of performance, course of dealing, usage of trade

Question 6

general rules courts resort to when interpreting contracts

Answer 6

• K’s construed as a whole
• construe words per ordinary meaning
• ambiguities in K are construed against party preparing the K
• parties course of dealing (sequence of conduct concerning PREVIOUS TRANSACTIONS b/w parties to a certain transaction)
• usage of trade (industry standard!)
• parties course of performance (if a K involves repeated occasions for performance by either party and other party has chance to object, any course of performance is relevant - focus is on CURRENT TRANSACTION)

Question 7

art 2 provisions on interpreting K’s
gap-filler terms (price, place of delivery, etc)

Answer 7

• in contracts for sale of goods – need quantity term
• if other terms are missing, art 2 has gap-fillers to fill in missing terms

Question 8

warranties

Answer 8

• contracts for sale of goods automatically include a warranty of title
• they may also include certain implied and express warranties

Question 9

express warranties

Answer 9

• affirmation of fact or promise made by seller to buyer; description of goods; any sample or model – creates express warranty IF it is part of “basis of the bargain” (“Cell phone is water proof”)

*seller’s opinion or value of the goods = not express warranty

Question 10

implied warranty of merchantability

Answer 10

implied in EVERY K for sale by merchant who sells goods of kind sold, there’s a warranty that goods are fit for ordinary purpose

Question 11

implied warranty of fitness for a particular purpose

Answer 11

whenever (1) any seller (merchant or not) has reason to know the particular purpose for which goods are to be used and that buyer is relying on seller’s skill/judgment and (2) buyer relies on seller’s skill/judgment

Question 12

warranty of title

Answer 12

warranty of title: ANY SELLER of goods warrants that title transferred is good

Question 13

disclaimer of warranties (protecting the SELLER)

Answer 13

• warranty of title: can be disclaimed/modified only by specific language or circumstances showing seller does not claim title
• implied warranties: can be disclaimed by either specific disclaimers or general methods of disclaimer

*disclaimer of warranties must be agreed to during bargaining process

Question 14

disclaimer of warranty of merchantability and warranty for fitness for particular purpose

Answer 14

• warranty of merchantability: by disclaimer mentioning ‘merchantability’ (if written disclaimer, must be conspicuous)
• warranty of fitness for part purpose: by conspicuous WRITTEN disclaimer

these two may also be disclaimed by language such as “as is”; examination or refusal to examine by buyer; course of dealing, performance, or usage of trade

Question 15

express warranties

Answer 15

very hard to disclaim an express warranty

Question 16

buyer’s damages for breach of warranty

Answer 16

• in general, measure of damages for breach of any warranty is difference between value of goods accepted and the value of goods as warranted (measured at time and place of acceptance)

Question 17

breach of warranty of title

Answer 17

if warranty of title is breached, goods are reclaimed by true owner or lienholder – dispossessing buyer

buyer can then rescind the K; revoke acceptance of goods; sue for damages

Question 18

delivery terms and risk of loss

Answer 18

• all K’s for sale of goods require delivery of the goods
• ROL – means who has to pay/who bears the risk if goods are lost/destroyed without fault of either party

Question 19

breach by seller and risk of loss

Answer 19

if seller ships nonconforming goods, it eliminates importance of determining whether K is a shipment or destination K – if goods are nonconforming, risk of loss remains on seller!

risk of loss passes to buyer once defects are cured OR buyer accepts

Question 20

noncarrier cases & risk of loss

Answer 20

• parties didn’t intend that goods would be moved by common carrier (when you buy groceries)
• if seller is a merchant: risk of loss passes to buyer only when they take physical possession of goods
• if seller is NOT merchant: risk of loss goes to buyer upon tender of delivery

Question 21

carrier cases & risk of loss

Answer 21

parties intended goods to be moved by a carrier (order a book from Amazon)

1) shipment K (presumption under UCC): if K authorizes/requires seller to ship by carrier but doesn’t require them to deliver goods at a particular destination, it is a shipment K

risk of loss passes to buyer when goods are DELIVERED TO CARRIER

NOTE: a K that doesn’t contain an FOB term or any other risk allocation term is a shipment K

2) destination K: if the K requires seller to deliver goods at a certain destination, risk of loss passes to buyer when goods are tendered to buyer at the destination (FOB [location] – seller bears risk and expense of getting goods to named location); seller is not obligated after it gets to the location!

Question 22

goods DESTROYED before risk of loss passes to buyer

Answer 22

if goods that were identified when the K was made are destroyed (1) without fault by either party and (2) before risk of loss passes to the buyer:

• K is avoided (seller’s performance excused)

if goods were not identified until AFTER K was made, seller has to show impracticability