What Are The Terms? Flashcards
Parol evidence rule - definition
a) Absent fraud, accident, or mistake, prior or contemporaneous extrinsic evidence is not allowed to vary, contradict, or add to a fully integrated, written agreement.
Parol evidence rule - Has the writing been adopted by the parties as a final expression of one or more terms of an agreement?
If yes, then the agreement is known as an “integrated agreement” with the consequence that evidence of prior or contemporaneous agreements or negotiations is not admissible in evidence to contradict a term of the writing.
Parol evidence rule - Is the agreement partially or completely integrated?
(a) If only partially integrated, then can’t contradict.
(b) If completely integrated, then can’t contradict and even evidence of a “consistent additional term” is not admissible to supplement the written agreement.
Parol evidence - UCC 2-202 Final Written Expression
Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented by:
(1) Course of dealing or usage of trade or by course of performance; and
(2) Evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
Parol evidence - Fully integrated agreement: Writing as final expression
Is the writing intended as a final expression?
(1) Both parties must have intended the writing to be a full and final expression of the terms of their agreement.
(2) Once final, parol evidence cannot contradict, vary, or supplement the written terms.
Parol evidence - Fully integrated agreement: Complete or partial integration
If final, is the writing a complete or partial integration?
(1) How do you determine?
(a) Williston Test: Would parties situated as were these parties to this contract naturally and normally include the extrinsic matter in the writing? If yes, then evidence is not admitted. If no, then evidence is admitted.
(b) 4 Corners Test: Look at the face of the document to determine whether it appears fully integrated.
(c) Credible Evidence Test (CA): If offered evidence is credible, then it will be allowed for the purpose of determining whether writing is integrated.
(2) If complete, can’t be contradicted or supplemented.
(3) If partial, can’t be contradicted but can be supplemented.
(4) Merger clause strengthens presumption of integration, but not conclusive.
Parol Evidence - Fully integrated agreement: exceptions
Formation defects (fraud, duress, mistake, illegality, etc.)
(2) Precedent conditions
(3) Interpreting an ambiguous term or dispute over meaning of a term
Objective interpretation and its limits
a) Contract should be given objective interpretation
b) Where there is a latent ambiguity, and each party’s interpretation is equally reasonable, then no K.
c) Where patent ambiguity, court will resolve by objective interpretation.
d) Where party A knows or has reason to know that party B attaches a certain meaning, and B does not know or have reason to know that A attaches a different meaning, B will prevail, even though A’s meaning may be more reasonable.
Supplementing the agreement - UCC Gap Fillers
UCC 2-305
(1) If parties do not agree on a price, the price will be deemed to be a reasonable price.
Implied warranty of merchantability
Unless excluded or modified (UCC 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to the goods of that kind.
b) To be merchantable, goods must be at least be:
(1) Fit for the ordinary purpose for which such goods are used; and
(2) Adequately contained, packaged, and labeled as the agreement may require; and
(3) Conform to the promises or affirmations of fact made on the container or label if any.
Implied warranty of fitness for a particular purpose
Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under section 2-316 an implied warrant that the goods shall be fit for such purpose.
Modifying/excluding implied warranties
a) To exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous.
b) To exclude or modify any implied warrant of fitness the exclusion must be by a writing and conspicuous.
(1) For example, “There are no warranties which extend beyond the description on the face hereof.”
c) Unless circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is”, “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty
d) An implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.
e) Disclaimers and limits on liability will not be given effect if unfairly procured; if not brought to the buyer’s attention and he was not made understandingly aware of it or if not clear and explicit.
Express warranties
Just another contract term
Good faith obligations
a) All K require good faith and fair dealing
b) Implied in all K and can’t agree otherwise.
