K Terms (mine)

Question 1

What does K include?

Answer 1

Contract includes:

1. the words of the parties
   
   1. express warrantees
2. UCC –> implied warranties
   3.

Question 2

What is the parol evidence rule (“PER”)?

NOTE: NY Distinction

Answer 2

Parole evidence rule rejects evidence of a prior or contemporaneous agreement (oral OR written) that contradicts a later writing

“Contradicts” if:

• fully integrated –> adds, alters, or contradicts last written terms
  
  • (fully integrated if parties intended to be final & complete record of all agreed terms
    
    • merger clause –> presumption, but not dispositive)
• partially integrated –> alters or contradicts last written terms

(NOTE: fact pattern involves an oral agmt, it’s a SOF problem, not a PER problem)

EXCEPTIONS:

• 1) to correct a CLERICAL ERROR
  
  • (e.g. a typo)
• 2) to establish a DEFENSE against formation
  
  • (e.g. fraud, duress, mistake, illegality, CONDITION PRECEDENT by extrinsic evidence)
• 3) to interpret a VAGUE or AMBIGUOUS term
  
  • (NOT if has plain/ordinary meaning)
• 4) to add to a PARTIALLY integrated writing
  
  • (a final stmt of the terms included, but not a COMPLETE stmt of terms agreed to, e.g. a lease for the ballroom that says nothing abt bridal suite)
  • NOTE: if there is a “merger clause” then this strengthens the PRESUMPTION that agmt is complete but is not conclusive

Not apply at all to:

• Subsequent words/actions of parties
• Evidence re: performance of condition precedent to obligations

Question 3

In the sale of goods (Art. 2/UCC), what are the 3 types of seller warranties?

Answer 3

1) Express warranty:

• (applies to all k’s)
• a seller is LIABLE for breach of an express warranty that are basis of bargain
  
  • (buyer COULD have rlied at time of K’ing):
    
    • (i) stmts of fact;
    • (ii) promises;
    • (iii) description of the goods;
    • (iv) sample/ model product
• BUT NOT opinions/general subjective stmts
  
  • (e.g. “all our products are top quality”)
  • NOTE: art appraisals = opinion too

2) Warranty of Title

• (applies to ALL k’s)
• = implicit warranty that goods are delivered w/good title
  
  • ​free of encumbrances (liens)

3) Warranty Against Infringement

• (Applies to all K’s by merchant sellers)
• = implicit warranty that goods do not infringe upon TM, copyright or patent

4) Implied warranty of merchantability

• (apples to all K’s by merchant who deals in type of goods sold)
• = warranty that the goods are fit for their ordinary purpose

5) Implied warranty of fitness for a PARTICULAR purpose

• (applies to K’s where seller has reason to know of buyer’s intended use & buyer actually relies upon seller’s specialized knowledge)
• = a warranty that the goods are fit for a PARTICULAR PURPOSE

Question 4

Can seller disclaim a warranty?

Answer 4

Seller can disclaim an i_mplied warranty_, but NOT an express warranty.

How to disclaim implied warranty:

• For warranty of mercantability:
  
  • ONLY if both:
    
    • express disclosure re: warranty of merchantability
    • • conspicuous
• For other implied warranties: 3 ways
  
  1. General/specific express disclaimer
     
     1. (“as is”, “with all faults”, “no warranties”)
  2. Buyer had opportunity to inspect & flaw would be apparent
     
     1. *wont help w/latent flaws
     2. (buyer need not actually inspect)
  3. Course of dealing/trade practice

UNCONSCIONABLE EXCEPTION:

• Presumed if ltd buyers remedy for PERSONAL INJURY is presumed unconscionable (rebuttable)

Question 5

Can seller limit Buyer’s remedies for breach of warranty?

Answer 5

Yes, for ANY warranty, if the limitation is not _unconscionable at the time of the K’s formatio_n.

Presumption: if limit recovery for personal injury resulting from consumer goods

Question 6

In the LEASE of goods (Art. 2A/UCC), what are the types of LESSOR warranties?

Answer 6

General rule:

• Same warranties under UCC/Art. 2A as under Art. 2 (i.e. express warranty, merchantability, fitness)

Effect:

• Lessee can seek reimbursement under warranty against EITHER seller/lessor

EXCEPTION: Finance Lease

• a “finance lease” where a bank serves as a lessor (after buying from mnfr);
• (warranty is ONLY operating by original mnfr.)

Limitation on warranty: same as with a sale of goods (Art. 2/UCC)

• (i.e. disclaimer OR ltd of buyer’s remedies)

Question 7

Who bears the risk of loss in the sale of goods?

(Art. 2/UCC)?

Answer 7

Risk of loss = who bears the risk if goods are damaged/destroyed BEFORE buyer gets them?

HIERARCHY: look for the following things in the ORDER listed…

1) Agreement:
* the agreement of the parties cntrls as to who shall bear the ROL
2) Breach:

• the breaching party bears ROL,
  
  • EVEN IF the loss is unrelated to the breach Defective goods: if buyer properly rejects them, the ROL does NOT pass to buyer until the goods are cured/accepted

3) Delivery by a common carrier (e.g. UPS):

• Shifts to buyer when seller completes its DELIVERY OBLIGATION;
• depends on type of destination OR shipment K
  
  • (K is PRESUMED a shipment K, unless otherwise stated
  • Shipment K:
    
    • seller must
      
      • (i) TRANSPORT goods to a common carrier;
      • (ii) make delivery ARRANGEMENTS;
      • AND (iii) NOTIFY buyer HERE, buyer bears ROL even before he gets the goods A
    • (includes “FOB [seller’s place of business]”
  • Destination K:
    
    • seller must
      
      • (i) TRANSPORT goods to a SPECIFIC location (usually, where buyer is located)
      • (includes “FOB [anywhere else]”)

4) Non-carrier cases

• ROL depends on whether seller is a MERCHANT…
  
  • Merchant seller:
    
    • seller bears ROL until buyer takes POSSESSION of the goods
  • Non-merchant seller:
    
    • ROL passes to buyer when seller makes the goods AVAILABLE to the buyer (i.e. the seller “tenders” the goods)

Question 8

Who bears the risk of loss in lease of goods?

(Art. 2A)

Answer 8

General rule:

• the ROL is on the LESSOR

EXCEPTION: Finance Lease

• a “finance lease” where a bank serves as a lessor (after buying from mnfr);
• ROL is on the LESSEE

Question 9

Missing terms?

Answer 9

UCC Gap-Fillers:

Court will presume that parties intended to include reasonable terms

• Price:
  
  • default: reasonable price at time of delivery
  • UNLESS one party can create later
    
    • = good faith standard
    • if not, then:
      
      • can cancel
      • OR fix reasonable time himself
• Place of delivery:
  
  • = seller’s place of business
• Time of delivery:
  
  • = time & place where delivered to buyer

Question 10

Vague terms?

Answer 10

Will render the K void if too vague for court to enforce.

How to correct:

1. Parties’ conduct
2. Partial performance

If no K, equitable remedy (quantum meruit)

Question 11

How is conduct relevant to K interpretation?

Answer 11

Use conduct to:

A) Explain words in the K

B) Fill gaps in the K Order of importance of conduct:

• 1) Course of performance:
  
  • what parties have done under THIS K; this is the BEST evidence
• 2) Course of dealing:
  
  • what these parties have done under PRIOR Ks with each other
• 3) Usage of trade (custom):
  
  • what is the custom in the INDUSTRY in similar Ks; this is the furthest removed from the K