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1. Parol Evidence Rule
I. Parol Evidence Rule excludes express
A. Prior oral and written evidence
B. Contemporaneous oral evidence
C. (Does NOT exclude contemporaneous written
evidence)
D. Doesn't necessarily exclude implied terms (time,
place, etc.)
II. Policy
A. Protect against perjury
B. Excludes prior agreements under theory of merger
C. Encourages people to put agreements into writing
III. Is the agreement an integrated agreement?
A. Did the parties intend the agreement to be final
with respect to some terms?
1. If yes, then admit only
consistent evidence.
IV. Is the agreement a completely integrated agreement?
A. Did the parties intend the agreement to be final
with respect to all terms?
1. If yes, then admit no
evidence.
2. Factors to determine if
it's completely integrated
a. Is
there a merger clause? Is it a form K?
VI. Restatement test
A. Is this the type of term that parties might
naturally leave out?
1. If YES, allow the evidence
in
B. Exceptions always allow evidence in
1. Fraud, illegality, duress,
mistake, lack of consideration, or other invalidating cause
2. Condition precedent (must
occur before there's a K)
3. Interpretation (other
evidence allowed to interpret meanings intended by parties)
a.
Minority test (Restatement) Reasonable Susceptibility Test is the language reasonably
susceptible to this meaning?
b.
BUT, most jurisdictions use Plain Meaning Rule look at the plain and unambiguous language
of the K and don't allow evidence from surrounding circumstances
VII. UCC test
A. Is this the type of of term that would certainly
have been included?
1. If NO, allow the evidence
in
B. Exceptions always allow evidence in (UCC may be
suplemented by common law)
1. Fraud
2. (?) Condition precedent
not included in UCC but can usually apply by analogy from Restatement
3. (?) Interpretation not in
UCC; don't know if we can apply by analogy from Restatement. "Explained" in
2-202 may mean interpretation
4. Course of dealing/course
of performance/usage of trade2. Usage of Trade/Course of Dealing/Course of
Performance
I. UCC Hierarchy (most specific to most general)
A. Express terms
1. What does the language of
the K say?
B. Course of performance
1. How are the parties
peforming this K?
C. Course of dealing
1. How have these parties
performed prior K between themselves?
D. Usage of trade
1. What is the meaning of the
term in the trade or industry?
3. Form Contracts
I. Battle of the Forms
II. UCC
A. Is there a K?
1. K may be made in any
manner sufficient to show agreement, including conduct by both parties which recognizes
the existence of a K.
2. The moment of the K's
making may be undetermined.
3. A K does not fail even
though one or more terms is left open if
a.
the parties have intended to make a K, and
(1) use UCC gap fillers for missing terms
b.
there's a reasonably certain basis for giving an appropriate remedy
B. If there's a K, what are its terms?
1. Additional terms are
proposals unless acceptance is expressly made conditional on assent to the additional or
different terms.
2. If K is between a merchant
and a non-merchant then proposals fall out.
3. If K is between two
merchants then terms become part of the K unless
a.
the offer expressly exludes new terms
b.
the terms materially alter the K
c.
party notifies other party of objection
4. If one of these exceptions
is met then ct. may handle it in one of three ways
a.
different terms=additional terms and become part of the K unless exceptions are met
b.
4. Mistake
I. Mutual Mistake
A. Mistake as to a basic assumption
B. Mistake must have a material effect on the K
C. No assumption of the risk
D. Doesn't apply if seller knows about the problem
II. Unilateral Mistake
A. Recission is allowed when
1. The other party knows or
has reason to know of the mistake when the K is made; or
a. No
"meeting of the minds" if one party knows of mistake
2. following three elements
are met
a.
enforcing the K would be oppressive or result in unconscionably unequal exchange of
values; and
(1) must be substantial but not astronomical
b.
recission must impose no substantial hardship on the other party; and
(1) either K is executory; OR
(2) put parties in the status quo anty (give reliance damages)
c.
mistake must be clerical or computational
(1) NOT a mistake of judgment or wisdom
III. Non-Dislosure
A. Must disclose when
1. Know that the disclosure
would correct mistake as to a basic assumption of the K, and
2. Not disclosing would not
be in good faith or in accord with reasonable standards of fair dealing
B. Latent dangerous defects must be disclosed
C. Half-truths and fiduciary duty may be fraud
IV. Innocent Misrepresentation
V. Negligent Misrepresentation
VI. Mistake in Transcription
A. Reformation
1. Must meet the clear and
convincing standard
2. Know or should have known
of mistake
3. No jury
VII. A party bears the risk of mistake when
A. the risk is allocated to him by agreement of the
parties; or
1. "As is" clause
B. party knows that she has only limited knowledge
with respect to the facts but treats his knowledge as sufficient; or
1. Conscious ignorance
C. the risk is allocated to her by the court on the
grounds that it is reasonable in the circumstances to do so
5. Order of Performance
I. Performance should be simultaneous if possible
A. If one party's performance requires a period of
time, his performance is due first
II. Must tender before breach.
6. Good Faith
I. Good faith is honesty in fact
A. UCC
1. Honesty in fact and
observance of reasonable commercial standards of fair dealing in the trade
B. Restatement
1. Faithfulness to agreed
common purpose and consistency with the justified expectations of the other party
II. Bad faith
A. Restatement
1. Conduct that violate
community standards of decency, fairness, or reasonableness
2. Subterfuge and evasions
3. Evasion of the spirit of
the bargain
4. Lack of diligence and
slacking off
5. Willfull rendering of
imperfect performance
6. Abuse of power to specify
terms
7. Interference or failure to
cooperate in the other party's performance
7. Warranties
I. Express warranties
A. Any affirmation of fact becomes a warranty of that
fact
B. Any description which is made part of the bargain
creates an express warranty that the good will conform to the discription
C. Any sample or model creates a warranty that the
goods will conform to the sample or model
D. Not necessary to use words such as
"warrant" or "guarantee" to create an express waranty, but an
affirmation of the value of the goods or an opinion or commendation of the goods does not
create a warranty.
II. Implied warranty of merchantability
A. Implied in the K if the seller is a merchant with
respect to this kind of good.
B. Merchantable goods must
1. pass without objection
under the K discription
2. be of fair average quality
if the goods are fungible
3. be fit for the ordinary
purpose for which such goods are used
4. be adequately packaged and
labeled as the agreement may require
5. conform to the promises or
affirmations of fact made on the container or label
C. May arise from course of dealing or usage of trade
D. Can't exclude unless the language is conspicuous
and mentions MERCHANTABILITY
III. Implied warranty of fitness for a particular purpose
A. Where the seller has reason to know at the time of
delivery
1. any particular purpose for
which the goods are required, and
2. that the buyer is relying
on the seller's skill and judgment to select suitable goods
there is an implied warranty that the goods
shall be fit for such purpose.
B. In order to exclude must be
1. in writing
2. conspicuous
3. Sufficient if it states
"There are no warranties which extend beyond the description on the face hereof"
IV. Exclusion of modification of warranty
A. Merchantability=must mention MERCHANTABILITY and
be conspicuous
B. WFPP=must be in writing and conspicuous.
C. All implied waranties are excluded by
1. Expressions like "as
is," "with all faults," or similar language
2. If the buyer examines the
goods before buying, no warranty as to defects an examination ought to have revealed to
him
3. Excluded or modified by
course of dealing, course of perforamance, or usage of trade8. Substantial
Performance
I. Is the breach material or minor?
A. Does the performance meet the essential purpose of
the K?
B. Material breach does not meet the essential
purpose of the K
1. Contractor may only sue
under Quantum Meruit (can't sue under the K)
a.
FMV of the services how much to get identical service elsewhere?
b.
Increase in value of property
c.
Dobbs measure
(1) K price
$100,000
- Cost of completion $ 30,000
---------------------------------------
Quantum Meruit $ 70,000
C. Minor Breach Contractor has substantially
performed the K (essential purpose has been served)
1. Contractor may sue under
the K
a. K
price
$100,000
- Damages (usually cost $ 30,000
of completion Dobbs)
---------------------------------------------
Contractors $
$ 90,000
b. If
unreasonable economic waste, damages= diminution in value9. Breach
I. Is the breach material or minor?
A. Material
1. Relieves other party of
its obligations
B. Factors a court uses to determine if a breach is
material
1. extent injured party will
be deprived of the benefit he reasonably expected
2. extent injured party can
be adequately compensated
3. extent the party failing
to perform will suffer forfeiture if the K is rescinded
4. likelihood that party
failing to perform will cure his failure, taking into account all of the circumstances
5. extent to which the party
failing to perform has acted in good faith
10. Impracticability and Frustration
I. Impracticability
A. Unexpected contingency has occured
B. No assumption of the risk
C. Commercially impracticable to perform
II. Frustration of purpose
A. Unexpected contingency, and
B. No assumption of the risk, and
C. Purpose of the K is frustrated, and
D. Value of the K is totally destroyed
III. Remedies
A. Restitution
B. Reliance (if justice so requires)
11. Conditions
I. Express conditions bypass the doctrine of substantial performance
II. Condition precedent
A. Some event must occur for the duty to arise
III. Condition subsequent
A. Party already has a duty but the occurance of some
event excuses that party's duty
IV. Burden of pleading and proving
A. FRCP
1. It is sufficient for
Plaintiff to aver generally that all conditions precedent have been performed or have
occured
2. Defendant then has a duty
to show that the conditions were not met
V. Interpretation
A. Ct. always tries to interpret as a promise if
possible in order to avoid forfeiture
*********************************
VI. Conditions of satisfaction
A. Objective
1. Reasonable person standard
a.
commercial utility
b.
operative fitness
c.
mechanical utility
B. Subjective
1. Implied standard of good
faith
a.
extrinsic evidence
(1) someone heard person say he actually liked it
b.
offer to buy at lower price
VII. Excuse condition if
A. not material to the K, and
1. Ct. always tries to show
that it's material to avoid forfeiture
B. disproportionate forfeiture, or
C. impracticability
12. Assignment and Delegation
I. Assignment of rights is OK unless
A. materially vary the duty owed, or
B. materially increases the risk
C. materially reduces the value of return
performance, or
D. statute or against public policy, or
E. validly precluded by the K
F. Cts. construe clause forbidding assignment of the
K narrowly
1. Allow assignment but
permit action for damages
II. Delegation of duty is OK unless
A. contrary to public policy, or
B. contary to the terms of the K, or
C. duty involves personal service, personal skills,
or discretion
D. Cts. do not allow delegation of duty if it's
forbidden in K
III. Negotiable instruments13. Third-Party Beneficiary Contracts
I. Duty to intended beneficiary (recognition of a right is appropriate
to effectuate the intention of the parties)
II. Rights of TPB vest upon
A. Reliance by the TPB
B. Assent to a TPB K
C. TPB has filed suit
III. Defenses
A. Promisor can assert the same defenses against the
TPB as he could against the promisee
B. Promisor cannot assert a defense which the
promisee could assert against the TPB
14. Anticipatory Repudiation/Adequate Assurance of Performance
I. Two consequences:
A. Tender is not required by the non-breaching side
B. Non-breaching party can sue immediately
II. Exceptions
A. K becomes unilateral (one side has completely
performed)
B. Installment K for tender/payment of money
III. Express Repudiation
A. Statement that the party does not intend to
perform
IV. Implied Repudiation
A. Reasonable person knows the other party is not
going to perform
1. Must be impossible for the
party to perform
V. Retraction of Repudiation
A. Can retract repudiation unless
1. Reliance
2. Acceptance
a.
filing a suit
VI. Apparent Impossibility of Performance
A. If no assurances, can withhold performance
B. Reasonablness depends on the circumstances
