Flashcards in Gap-Fillers, Interpretation, and the Parol Evidence Rule Deck (39):
UCC Default Rules for the Sales of Goods: Implied Warranties
1. warranty of title
2. warranty of merchantability
3. warranty of fitness for a particular purpose
Warranty of title means?
How to modify?
1) Good title to the goods (I really own them)
2) The rightful transfer of the goods (allowed to sell them)
3) No liens are attached to the goods
Can be excluded or modified by specific language or circumstances showing no good title.
Warranty of Merchantability is?
(a) The warranty guarantees that the goods are fit for the ordinary purposes for which those goods would be used
Warranty of merchantability only applies if?
The seller is a merchant
Warranty of merchantability can be displaced by?
1) Specific mention of the word “merchantability” + conspicuousness (bold font) if in writing;
2) Any other language or circumstances that are reasonably understood to exclude the warranty
“Patent defects” easily observable defects → obvious defects
Warranty of Fitness for a Particular Purpose is found when?
The warranty only applies where, at the time of contracting, the seller has good reason to know
1) The particular purpose for which the goods are required; and,
2) That the buyer is relying upon the seller’s skill to select reasonable goods
How to disclaim warranty of fitness?
1) When the disclaimer is in writing + clear + conspicuous (bold font)
2) If the goods have obvious defects
UCC default rule for a missing price term?
Reasonable market price at the time established for *delivery*
UCC default rule for a missing time term?
A reasonable time
UCC default rule for a missing place of delivery term?
Seller's place of business
Common law default rule for a missing price term?
Reasonable value for the services rendered
Common law default rule for a missing duration term in an employment contract?
At will employment
Obligation of Good Faith and Fair Dealing for both UCC and Common Law?
(1) In general, “good faith” is defined as:
(2) In the case of a merchant, “good faith” means:
honesty in-fact + observance of reasonable industry standards
When is the Obligation of Good Faith and Fair Dealing triggered?
where the terms of the contract leave a critical term, such as:
1. the price,
3. or quantity
open to the determination of one party.
Under the UCC, the party entitled to determine the particular quantity of goods to be sold—either the buyer demanding delivery of his requirements or the seller demanding purchase of her output—must
make that determination in good faith.
- Cannot lie about output
- Cannot lie about your actual requirements
For outputs and requirement contracts, when will obligation be voided?
prohibits any unreasonably disproportionate demand or tender, if there was either:
1) A stated estimate; or,
2) A past course of dealing
When one party has reason to know of the other parties subjective understanding
the first party is bound by it
When at the time of contracting, both parties have the same subjective understanding
then it controls
The Rule of Contra Proferentem
(1) If an ambiguous term is included in the contract, then: in case of doubt, construe against the drafter
The Doctrine of Reasonable Expectations applies when?
Contracts of adhesion (e.g. insurance)
The doctrine only applies to defeat the enforceability of: the boilerplate terms that are inconsistent with the reasonable expectations of the purchaser.
In construing a contract, what order to look for evidence?
express term > course of performance > course of dealing > usage of trade
Usage of trade is
is any practice or method of dealing having such regularity of observance in a place or trade as to justify an expectation that it will be observed with respect to the transaction in question.
Course of dealing is
a pattern of conduct concerning previous transactions between the parties that is fairly to be regarded as establishing a common basis of understanding for interpreting their subsequent expressions and other conduct.
Course of performance is?
present when a particular contract involves repeated occasions for performance by a party and the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.
Trade Usage, Course of Dealing, and Course of Performance is admissible in contracts to do what?
What can it not do?
1. fill in gaps
2. resolve ambiguities
Contradict express terms
Course of performance evidence can establish
establish a waiver
modification of express terms
When a particular contract is partially integrated, it means that:
The terms contained within the writing is intended to be the final expression of those terms
when a contract is completely integrated, it means that:
The parties intend the contract to be the complete + exclusive statement of all the terms
The question of whether the terms of a contract are partially integrated (i.e., final) and whether an integration is complete (i.e., exhaustive) is for who to decide?
The judge, not the jury
What is the best evidence of a completely integrated contract?
a Merger clause
That the writing contains the “complete and entire agreement of the parties” or other words to that effect
What are the three purposes parole evidence is introduced?
(1) To explain or interpret the terms of the written contract
(2) To supplement the terms of the written contract
(3) To contradict the terms of the written contract
Legality of using parole evidence to explain or interpret terms of a written contract
Parole evidence is always admissible for this purpose
Common Law Legality of using parole evidence to supplement terms of a written contract?
parole evidence is admissible for this purpose;
unless the contract is completely integrated
Steps in analyzing a Parole Evidence Question
(1) What is the purpose for which the evidence is being introduced?
(2) Does the evidence relate to a term or contract that is integrated? --> partially or completely?
UCC Legality of using parole evidence to supplement terms of a written contract?
Trade usage, course of dealings, and course of performance can supplement a completely integrated agreement
Legality of using parole evidence to contradict terms of a written contract?
parole evidence is not admissible for this purpose
The parol evidence rule only applies to
oral or written communications
made prior to or contemporaneously with
the execution of a written agreement.
Does the parole evidence rule apply to an Attack on the Validity of the Written Agreement
no, can use parole evidence to prove that the written agreement is invalid or unenforceable