Terms of the K

Question 1

Ordinary Meaning

Answer 1

Courts construe words according to their ordinary meaning unless it is clearly shown that they were meant to be used in a technical sense

Question 2

Contradicting terms in a written deal

Answer 2

Evidence or earlier agreements CANNOT be considered for the purpose of contradicting terms in the written contract

Question 3

Parol Evidence Rule

Answer 3

When parties to a K express their agreement in a WRITING with the INTENT that it embody the final expression of their bargain, it is INTEGRATED. Once integrated, any other oral or written expression made PRIOR or CONTEMPORANEOUS to the writing are INADMISSIBLE

DOES NOT AFFECT POST CONTRACT STATEMENTS

Question 4

Formation Defects

Answer 4

Can bring in extrinsic evidence to show that the defect exists.

Fraud, duress, MISTAKE (clerical error), illegality, misrepresentation

NOTE: still can’t contradict terms in the K with this extrinsic evidence though.

Question 5

Ambiguity

Answer 5

parol evidence DOES NOT prevent a court from considering evidence of earlier agreements to resolve ambiguities in the written contract

Question 6

Merger Clause

Answer 6

In commercial contracts, usually determinative that it is integrated. All other K, it is merely a factor in determining integration.

Question 7

Adding to Written Deal

Answer 7

parol evidence rule prevents a court from considering evidence of earlier agreements as a source of consistent, additional terms, unless if court determines that (1) written agreement was only a PARTIAL INTEGRATION, or (2) that the additional terms would ordinarily be in a separate agreement

Question 8

Course of Performance

Answer 8

Same people, same K

If same people in prior contracts have had repeated performance and other party has had opportunity to object, any course of performance accepted or acquiesced to can provide for contract terms

(sending boiled hens and not chickens every month for 12 months)

Question 9

Course of Dealing

Answer 9

Same people, different but similar K

Pervious transactions between same parties may be regarded as establishing a common basis of their understanding

Question 10

Custom and Usage

Answer 10

Different but similar people, different but similar K

Trade customs regularly observed can justify an expectation that those customs will be followed in the transaction at issue

Question 11

Shipment Contracts

Answer 11

UCC rule. Triggered by delivery by a COMMON CARRIER

Seller completes delivery obligation when it (1) gets the goods to a common carrier, (2) makes reasonable arrangements for delivery, and (3) notifies the buyer.

Seller completes delivery before delivery is completed

Question 12

Destination Contracts

Answer 12

UCC rule. Triggered by delivery by COMMON CARRIER

Seller DOES NOT complete its delivery obligation until the goods arrive at the destination

Question 13

FOB Contracts

Answer 13

If FOB is followed by the city where the SELLER is or where the GOODS are, it is a SHIPMENT contract.

Any other city means a DESTINATION contract

Question 14

Risk of Loss

Answer 14

When goods destroyed and neither buyer nor seller are to blame

(1) agreement of the parties controls;
(2) if no agreement, then breaching party liable for any uninsured loss, even if breach is COMPLETELY UNRELATED to the problem; (3) if common carrier, risk of loss shifts from seller to buyer at the time seller completes delivery obligations (shipment or destination; (4) finally if none apply, determining factor is whether SELLER is a MERCHANT (buyer’s status irrelevant)

If seller is merchant, risk of loss shifts to buyer upon buyer’s receipt of goods (physical possession)

If seller is a nonmerchant, risk of loss shifts to buyer when seller “tenders” the goods (makes available)

Question 15

Express Warranty

Answer 15

UCC

Look for words that promise, describe, sample/models, or state facts. NOT opinions or general words.

“all steel,” “guaranteed…,” “sample shown.” NOT “top quality”

Question 16

Implied Warranty of Merchantability

Answer 16

When a person buys from a MERCHANT that deals in GOODS OF THE KIND SOLD, implied warranty that goods are fit for the ORDINARY PURPOSE For which such goods are used

Seller’s knowledge irrelevant

Question 17

Implied Warranty of Fitness for a Particular Purpose

Answer 17

Warranty implied whenever (1) ANY seller (merchant or not) has reason to know the particular purpose for which the goods are to be used; (2) buyer is relying on seller’s skill and judgment to select suitable goods; and (3) buyer in fact relies on seller’s skill and judgment

Question 18

Statute of Limitations for Warranties

Answer 18

FOUR YEAR SOL, and generally begins to run when the tender of delivery is made, NOT when buyer learns of the defect

Question 19

Buyer’s Examination of Goods

Answer 19

No implied warranties for defects which would be OBVIOUS on examination

Question 20

Disclaimer of Warranties

Answer 20

Express warranties generally cannot be disclaimed, but can be limited

Implied warranties can be disclaimed by either (1) CONSPICUOUS language of disclaimer MENTIONING merchantability such that a reasonable person would have noticed it (size, type, font, color), or (2) stating “as is” or “with all faults”

Course of dealing or trade usage can also disclaim

Question 21

Limiting remedies

Answer 21

Different than a full disclaimer. CAN LIMIT express warranties

General test is unconscionability.

NOTE: limiting damages for personal injury caused by a breach of warranty on consumer goods is PRIMA FACIE UNCONSCIONABLE