Terms of the Contract (Module 5) Flashcards
(26 cards)
Parole Evidence Rule
Any PRIOR oral or written expressions and any CONTEMPORANEOUS oral expressions are inadmissible to vary the terms of an integrated contract
Prohibits admissibility of any extrinsic evidence that seeks to vary, contradict, or add to an integration
Integration
Two components:
1) final expression of the agreement
2) is intended to be complete/final
Evidence is admissible to show the parties’ intent
All UCC Contracts are partial integrations!
Merger Clause
Recites that teh agreement is the complete agreement of the parties
Typically determinative of final integration in large commercial K’s, but modern trend is to consider it as one factor in determining integration
Types of Evidence Outside the Scope of the P.E.R.
RV UNITS
Types of evidence permitted:
1) Reformation
2) Validity Issues
3) UCC specific
4) Naturally Omitted Terms
5) Interpretation
6) True Consideration
7) Subsequent Modifications
Reformation (P.E.R Exception)
R (Reformation) V U N I T S
Extrinsic facts to show that that a party is entitled to reformation (such as mistake)
Validity Issues (P.E.R Exception)
RV(Validity) UNITS
Extrinsic evidence is allowed to show:
1) Formation Defects
2) Oral conditions that were conditions precedent
UCC Specific P.E.R. Exceptions
RV U(U.C.C. Specific)NITS
Generally follows common law rules but can NOT add ADDITIONAL terms if:
1) There is a merger clause
2) Court determines from all the circumstances that the writing is a complete/exclusive statement of the terms
Written terms CAN be EXPLAINED by evidence of course of performance, course of dealing, and usage of trade, even if the writing isn’t ambiguous
Naturally Omitted Terms (P.E.R Exception)
RV UN(Naturally Omitted)IT
A term would naturally be omitted if:
1) it does not conflict with the written integration
2) about something that similarly situated parties would not ordinarily be expected to include
Interpretation of Ambiguous Terms (P.E.R Exception)
RV UNI(Interpretation)TS
If there’s uncertainty/ambiguity of a term in the agreement, evidence can be brought to help fact finder in reaching correct interpretation; if meaning of the agreement is plain not allowed
True Consideration (P.E.R Exception)
RV UNIT(True Consideration)S
Extrinsic evidence showing that true consideration was/wasn’t paid is allowed
Subsequent Modifications (P.E.R Exception)
RV UNITS(Subsequent Modifications)
Evidence can be introduced to show subsequent modifications of a written contract
Course of Dealing
Sequence of conduct concerning previous transactions between parties may be used to establish a common basis of their understanding
Usage of Trade
practice or method of dealing regualrly observed in a particular business
Course of Performance
If a contract involves repeated occasions for performance by either party and the other party has the opportunity to object to such performance, prior performance accepted/acquiesced to is relevant in determining meaning of the contract
Express Terms
Given greater weight than course of dealing, performance, and usage of trade
Order:
1) express terms
2) course of performance
3) course of dealing
4) usage of trade
General Rules of Contract Construction (long)
1) contract construed as a “whole”, specific clauses subordinate to the general intent of the whole thing
2) words are construed to their ordinary meaning unless clearly shown they are meant in a technical way
3) Written or typed provisions prevail over printed provisions
4) courts will generally try to reach decision that K is enforceable
5) ambiguities are construed against the party preparing the contract
6) express terms > course of performance > course of dealing > usage of trade
UCC “Gap-Filler” Terms
UCC contracts that have the following terms missing will be “gap-filled” by the court:
1) price (reasonable price at time of delivery)
2) place of delivery (seller’s place of business)
3) time for shipment/delivery (reasonable time)
4) time for payment (time and place at which buyer is to receive goods)
5) assortment of goods (buyer’s option to choose)
UCC Express Warranties
Any affirmation of fact/promise made by the seller to the buyer that the buyer could have relied on (even if they didn’t)
Statements of value/opinion are not express warranties
Very difficult to disclaim
UCC Implied Warranty of Merchantibility
Implied in every K for a merchant who deals in goods of the kind sold; goods must be “fit for the ordinary purpose in which they are used”
Does not matter whether or not the seller was aware of the defect
“As is” disclaims this warranty
UCC Implied Warranty of Fitness for Particular Purpose
Will be implied in a contract for a sale of goods when:
1) buyer comes in with special purpose
2) seller knows of that special purpose
3) seller picks out good for the buyer’s special purpose
4) buyer in fact relies on seller’s expertise
Can be disclaiemd by conspicuous written disclaimer
UCC Warranty of Title
Seller basically saying that the good isn’t stolen and the seller is able to pass title
Can be disclaimed or modified by specific language
UCC Warranty Against Infringement
For normal goods seller warrants they are free of any patent/trademark etc. claims
But if buyer gives specifications for the goods no warranty
Place of Delivery
Noncarrier contract: seller’s place of business
Carrier contract:
1) Shipment Contract - seller must deliver to the shipper
2) Destination Contract - delivery tendered to buyer at destination
Time for Payment
Noncarrier contract: upon tender of delivery
Carrier contract: when buyer receives the goods
