Professor Bell
Contracts II
Spring 2014
Body of Law
SALE OF GOOD – UCC
· This case involves the sale of a vehicle, which is a good under UCC 2-105 because it is moveable at the time of K.
· Therefore, the UCC article 2 applies to this K with the Restatement serving as a backdrop.
· Here, Sally (S) is a merchant under UCC 2-104 because she deals in goods of the kind involved in this transaction.
· Bill (B) is not a merchant because he does not deal in goods of the kind involved in this K.
SERVICES – RESTATEMENT
· In this case, the K at issue is predominantly for _____, which is a service, so the Restatement will apply.
TWO K’S:
· It could be argued that there are two K’s at issue in this case.
· The first K involves the sale of a _____, which is a good under UCC 2-105, because it is moveable at the time of K.
· Therefore, the UCC article 2 applies to this K with the Restatement serving as a backdrop.
· Here, Sally (S) is a merchant under UCC 2-104 because she deals in goods of the kind involved in this transaction.
· Bill (B) is not a merchant because he does not deal in goods of the kind involved in this K.
· The other K involves _____, which is a service, so the Restatement will apply to this K.
FORMATION
PRELIMINARY NEGOTIATIONS:
· R26: A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made further manifestation of assent.
OFFER:
· R24: An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
ACCEPTANCE:
· R50: Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer.
· Mailbox – R63: Acceptance is effective as soon as it leaves the offeror’s hand.
CONSIDERATION:
R71: To constitute consideration, a performance or a return promise must be bargained for. It is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
“A giving ____ and B giving ____ would be consideration under R71 because that was what was bargained for.”
CERTAINTY:
· “The K has is reasonably certain under R33 standards because there is enough information to determine if there is a breach and for giving an appropriate remedy.”
· Just needs to be certain enough to determine if there would be a breach, and what the remedy would be.
CONSIDERATION:
· R71: To constitute consideration, a performance or a return promise must be bargained for. It is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
· “A giving ____ and B giving ____ would be consideration under R71 because that was what was bargained for.”
SoF:
“Neither party can raise a statute of frauds defense because the K satisfies the requirements of R131 as the K is evidenced by writing, signed by both parties, and it reasonably identifies the subject matter of the K (__), is sufficient to indicate a K has been made, and states with reasonably certainty the essential terms of the unperformed promises in the K.”
PAROL EVIDENCE RULE
BACKGROUND:
· Where parties have reduced their agreement to writing, the parol evidence rule (rule of substantive law) precludes evidence of agreements or negotiations prior to or contemporaneous with the adoption of that agreement from contradicting or supplementing its terms.
· It is not limited to oral agreements, but also operates to exclude writings, such a letters or emails, as well.
· Two Practical Consequences of Rule of Substantive Law:
o Parol evidence rule is characterized as substantive
o A failure to object to evidence that would establish the existence of an agreement not reflected in the writing does not bar a later assertion of the parol evidence rule.
· In our federal court system, under the Erie doctrine, federal courts apply state substantive law “to any issue or claim which has its source in state law.” Therefore, a federal court adjudicating a state law claim must apply the parol evidence rule of the appropriate state.
RESTATEMENT METHOD OF APPLYING PAROL EVIDENCE:
· If the writing is not “a final expression of one or more terms of an agreement” then the rule does not apply. If YES, then the agreement is known as an “integrated agreement,” with the consequence that “evidence of prior agreements or negotiations is not admissible in evidence to contradict a term of the writing.”
· If there is an integrated agreement, the second step is to determine whether the writing has been “adopted by the parties as a complete and exclusive statement of the terms of the agreement.” If NO, then the agreement is known as a “partially integrated agreement” and the rule has only the effect described in the previous paragraph. If the writing was adopted as a complete and exclusive statement of the terms of the agreement, the agreement is referred to as a “completely integrated agreement,” with the additional consequence that evidence of “a consistent additional term” is not admissible to supplement the written agreement. Such evidence is, however, admissible if the writing is only a “partially integrated agreement.”
· Integrated – a final expression of some terms
COLLATERAL AGREEMENT:
· The fact that the parties have adopted a writi
agreement discharges prior agreements to the extent that they are within its scope.
· R214 Exceptions to Parole Evidence Rule: (Loopholes to let in evidence)
o Agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible in evidence to establish:
§ (a) That the writing is or is not an integrated agreement;
§ (b) That the integrated agreement, if any, is completely or partially integrated;
§ (c) The meaning of the writing, whether or not integrated
§ (d) Illegality, fraud, duress, mistake, accident, lack of consideration, or other invalidating cause;
§ (e) Ground for granting or denying rescission, reformation, specific performance, or other remedy.
o “__ could admit into evidence ________ as it falls under R214(__), which goes to show___,”
· R215 Evidence Contradicting Integrated Terms Not Allowed
o Except as stated in the preceding section, where there is a binding agreement, either completely or partially integrated, evidence of prior or contemporaneous agreements or negotiations is not admissible in evidence to contradict a term of the writing.
o “The evidence that A wants to introduce does not contradict a terms of the writing.”
· R216 Evidence of Consistent Additional Terms Allowed
o (1) Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court finds that the agreement was completely integrated.
o (2) An agreement is not completely integrated if the writing omits a consistent additional term which is
§ (a) Agreed to for separate consideration, or
§ (b) Such a term as in the circumstances might naturally be omitted from the writing.
o “If the court finds that the agreement was only partially integrated, A could introduce the evidence of ____ as it is a consistent additional term that supplements the agreement, and is such a term as in the circumstances might be naturally omitted from the writing.”
· Merger Clauses (Entire agreement clauses): strong evidence that the parties intended the writing to be the complete and exclusive agreement between them. Not dispositive:
o “The merger clause gives added weight to the fact that the agreement might be construed as completely integrated but it is not dispositive.”
