Interpretation Flashcards
Define: parol evidence rule
Bars admission of extrinsic evidence of prior or contemporaneous agreements or dealings that contradict/supplement the terms of integrated K’s
Define: integrated K
K parties intended to be the final expression of their agreement
Define: partially integrated K
K that expresses the parties final agreement about some terms, but not all terms
Define: merger clause
States that K contains the complete and entire agreement of the parties. Evidence of total integration.
What constitutes prior dealings for the purposes of the parol evidence rule?
- Oral negotiations and agreements prior to contract
- Written agreements prior to contract
Does parol evidence bar admission of subsequent agreements?
No, the parties may always modify the K
When does the parol evidence rule not apply? (i.e. when you can introduce extrinsic evidence?)
- K was only partially integrated
- To show that K does not exist/was never formed (evidence of misunderstanding, mistake, etc)
- As defense to enforceability (duress, illegality, etc)
- To resolve ambiguities
- To prove condition precedent
- To supplement or explain terms w/ evidence of trade usage/past dealings (UCC § 2-202 - sale of goods only)
- To help court interpret K by showing parties’ subjective understanding of terms
What is the UCC’s approach to extrinsic evidence?
Presumption that K’s are partially integrated; allows addition of non-contradictory terms unless the parties would have “certainly” included them (UCC § 2-202)
What are 4 sources courts use to interpret K’s?
- Express terms;
- Course of performance;
- Course of dealing; and
- Trade usage
Rank the following from most important to least important for K interpretation:* Course of dealing* Trade usage* Course of performance* Express terms
- Express terms (most important)
- Course of performance
- Course of dealing
- Trade usage (least important)
Define: course of performance
How the parties have interacted in the CURRENT transaction
Define: course of dealing
How the parties have interacted in previous transactions with each other
Define: trade usage
A business custom or practice that is so common and pervasive that it is expected in regards to a certain transaction. Must be proven.
What is the common law default rule for a missing price term?
Reasonable value for the services rendered
Default common law rule for missing duration?
Reasonable length of time
