Gap Fillers, Interpretation, Parol E Rule

Question 1

Filling in the gaps w/Default Provisions - Gen’l Rule

Answer 1

The default gap fillers will be overridden where the parties provide for a different procedure, but if they do not, the default k terms will supplement their k.

Question 2

UCC Default Rules for the Sale of Goods - Deals w/3 areas

Answer 2

1. Implied Warranties
2. Express Warranties
3. Missing Terms

Question 3

Implied Warranties - FMT (Friendly Mr. T)

Answer 3

1. Warranty of Title and against Infringement
2. Warranty of Merchantability
3. Warranty of fitness for a particular purpose

Question 4

Warranty of Title and against infringment

Answer 4

For the sale of all goods, there is an implied warranty of good title to the goods, of the rightful transfer of the goods, and that no liens or other security interests are attached to those goods. Can only be excluded or modified by 1) specific language; or 2) circumstances which give the buyer reason to know that the seller does not claim unencumbered title

Question 5

Warranty of Merchantability

Answer 5

If the seller of goods is a merchant, then there’s a warranty guarantees that the goods are fit for the ordinary purposes for which those goods would be used

Question 6

Warranty of Fitness for a particular purpose

Answer 6

Only applies where the seller has good reason to know:

1. the particular purpose for which the goods are required; and
2. that the buyer is relying on the seller’s skill or judgment to select or furnish reasonable goods

Question 7

Excluding or Modifying IWs of Merchantability and Fitness

Answer 7

1. IW of Merchantability - use the word “merchantability”; need not be in writing, but if it is it must be conspicuous
2. IW Fitness - use of language that is conspicuous

Question 8

Eliminating all Implied Warranties

Answer 8

1. “there are no warranties which extend beyond the description on the face thereof”
2. “as is” or “with all faults” or similar language letting the buyer know of the exclusions
3. buyer has fully examined the goods before entering into the k
4. buyer refuses to inspect and defects would have been easily apparent
5. course of dealing/performance, usage of trade indicate no warranties

Question 9

Express Warranties

Answer 9

UCC says you can create Express Warranties (EWs). Seller can create EW by:

1. any affirmation of fact or promise
2. any description of the goods
3. any sample or model

Question 10

EW - affirmation of fact or promise

Answer 10

EW is created by any affirmation of fact or promise made by the seller to the buyer that relates to the goods and becomes part of the basis of the bargain. Goods must conform

Question 11

EW - Description of the goods

Answer 11

Goods must conform to any description of the goods that is made part of the basis of the bargain.

Question 12

EW - Sample or Model

Answer 12

Goods must conform to any sample or model that is made part of the basis of the bargain

Question 13

EWs v. Limitation or Disclaimer

Answer 13

Words or conduct relevant to the creation of express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent w/each other. Where EW conflicts with a limitation or disclaimer, the EW prevails.

Question 14

Missing Terms

Answer 14

Under the UCC, where pertinent terms are missing, use this:

1. Price term - reasonable price at time of k
2. Time Term - performance must be done w/in a reasonable time
3. Place of delivery term - seller’s place of business

Question 15

CL Default Rules for Service and EMT Ks

Answer 15

1. Missing Price Term - reasonable value of the services rendered
2. Missing Duration Term - as to EMT Ks, use “at will” EMT. Oral or written assurances of job security may take it out of the default rule (personnel handbook saying EMT is at will will win, but contradictory assurances will create a Q for the jury)

Question 16

The Obligation of Good Faith and Fair Dealing - Generally

Answer 16

Both UCC and CL impose an obligation of GF in the performance and enforcement of ks (DNA to pre-k conduct or negotiation)

Question 17

GF and Fair Dealing - “Good Faith”

Answer 17

1. GF - honesty in fact, in the conduct or transaction concerned.
2. GF re Merchant - honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade

Question 18

GF - Critical Terms left open

Answer 18

Open Price Term - if a k leaves the price to be fixed by one of the parties, then the specified party must fix the price in GF

Question 19

GF - Satisfaction Term

Answer 19

A k may contain a satisfaction clause whereby determination as to whether a party’s performance obligation is complete is left to the discretion of the other party - must do so in GF

Question 20

GF - Open QTY Term: Output and Requirements Ks

Answer 20

A. Output K - buyer agrees to buy seller’s output of a good
B. Requirement K - Seller agrees to supply buyer’s demand requirements for a good
IN BOTH SITUATIONS, EITHER BUYER OR SELLER MUST MAKE THE DETERMINATION IN GF

Question 21

Output and Requirement Ks - Disproportionate Tender or Demand

Answer 21

In addition to GF, UCC prohibits any unreasonably disproportionate demand or tender, if there was either

1. a stated estimate
2. or in the absence of an estimate, any comparable prior outputs or requirements

Question 22

Interpreting Ambiguous Language - Objective v. Subjective Meaning

Answer 22

Objectively reasonable meaning of a term at the time of contracting controls over a subjective understanding of the term by one of the parties. 2 Exceptions:

1. If one party knows or has reason to know of the other party’s subjective understanding, then that subjective interpretation will control
2. Where both parties share the subjective understanding of the term at time of contracting

Question 23

Interpreting Ambiguous Language - Contra Proferentum

Answer 23

If an ambiguous term is included in the K, then it is interpreted against the drafter. The meaning more favorable to the other party controls. Applies in ks where bargaining powers are equal and contracts of adhesion

Question 24

Interpreting Ambiguous Language - Reasonable Expectations Doctrine

Answer 24

Even unambiguous terms may be interpreted against the drafting party if they conflict with the reasonable expectations of the other party.

Question 25

Trade Usage, Course of Dealing, and Course of pe

Answer 25

Extrinsic E of these can be used to fill in contractual gaps or resolve ambiguities. It is not available to contradict express terms of the K. In case of conflict: COP>COD>Trade usage

Question 26

Usage of Trade

Answer 26

UCC defines this as any practice or method of dealing having such regularity of observance in a place or trade as to justify an expectation that will be observed with respect to the transaction in question.

Question 27

Course of dealing

Answer 27

UCC defines this as a pattern of conduct concerning previous transactions b/w the parties that is fairly to be regarded as establishing a common basis of understanding for interpreting their subsequent expressions and other conduct

Question 28

Course of Performance

Answer 28

UCC says this is present when a particular k involves repeated occasion 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.

Question 29

Parole E Rule - Generally

Answer 29

Parole E governs; 1. both oral and documentary E of negotiations and other communications b/w the parties; and 2. communications that took place prior to or contemporaneously with the execution of the written k

Question 30

Parole E Analysis

Answer 30

If a party seeks to introduce parole E, court will determine its admissibility of the E based on 2 questions: 1. what is the purpose of such E 2. does it relate to a term in the k which is integrated

Question 31

Integration - Full v. Complete

Answer 31

1. Full Integration - the terms contained within the k are intended to be the final discussion of the parties as to those specific terms. 2. Complete Integration - parties intend the k to represent a "complete and exclusive statement of all the terms" --> only the terms inside the k are considered part of the k

Question 32

Determining Full Integration

Answer 32

This is a Q for the JUDGE only. Judge looks at thoroughness and specificity of the written instrument in connection with the terms at issue. Parole E and extrinsic E are admissible

Question 33

Determining Complete Integration

Answer 33

Judge Q only. Look for: 1. merger clause (e.g., "contain the complete and entire agreement of the parties") 2. Details with which the k sets for the provisions and the k's length 3. Use "all the circumstances" test and consider proffered Parole E and extrinsic E in connection with that

Question 34

Purpose for which Parole E is introduced

Answer 34

1. to explain or interpret a term or terms 2. to supplement the term or terms 3. to contradict a term or terms

Question 35

Parole E to explain or interpret a term

Answer 35

Maj JDX: parole E is always admissible for this purpose. | Min: only if patently ambiguous

Question 36

Parole E - supplement terms

Answer 36

Parole E is admissible for this unless there's complete integration. However, the UCC allows trade usage, COD, COP in sale of goods cases to supplement the terms of a written agreement.

Question 37

Parole E - to contradict

Answer 37

admissible unless there's full integration.

Question 38

when is Parole E N/A?

Answer 38

1. Subsequent Agreements - DNA to subsequent agreements entered into after the execution of the written document 2. Collateral Agreements - Parole E rule doesn't affect agreements b/w the parties that are entire distinct from the written agreement of the k at issue (can use parole E) 3. Attacks on the validity of the written agreement (see next card)

Question 39

Parole E Rule N/A - Attack on Validity of the written agreement

Answer 39

Parole E will not bar efforts to prove that the written agreement is invalid or unenforceable. A party can assert this by showing: 1. failure of an oral condition precedent to the agreement 2. absence of consideration 3. mistake or duress 4. fraud 5. reformation

Question 40

Attacks on Validity of Written Agreement - Reformation

Answer 40

Parole E is n/a where a party alleges facts entitling him to reformation of the written agreement. To obtain reformation, pf must show: 1. there was an antecedent valid agreement 2. which is incorrectly reflected in the writing (e.g., by mistake); & 3. proof of these elements is established by C&C E