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Contracts II
South Texas College of Law Houston
Powers, Jean Fleming

Contracts II
Fall 2014
Interpretation and Construction
Sources of Contract Law
            •           Interpretation
            •           What this K means to the parties
            •           What did these words/provisions mean to these parties
            •           Ex: Hire someone to mow lawn every week during the summer
            •           When are they going to start? When are they going to finish?
            •           Need Interpretation bc of:
            •           Lack of precision
            •           Lack of care
            •           Different understandings
            •           Intended vagueness- flexibility, indecision
            •           Interpretation Rules and Guidelines
            •           Consider circumstances/parties purpose
            •           Interpret writing as a whole
            •           Use general and technical meanings, unless a different intention manifested
            •           Consider manifestations of intent, course of performance, course of dealing, usage of trade
            •           Use common law if no UCC on point
            •           Expression of one implies exclusion of others in its class
            •           General language followed by specific items, the general language is limited to things similar to the specific. (can add, “including, but not limited to…”)
            •           Interpretation Standards
            •           Prefer reasonable, lawful, and effective meaning to all terms
            •           Order (Hierarchy) for PER as well:
            •           Express terms
            •           Cant contradict (express terms control)
            •           Course of performance
            •           Course of dealing
            •           Usage of trade
            •           Reconcile all of these if possible
            •           Use unless “carefully negated”
            •           Assume taken for granted ???
            •           Specific terms over general
            •           Separately negotiated or added terms over standardized terms
            •           Interpretation favoring public policy
            •           Interpret against the draftsman
            •           Interpret in favor of who didn’t have a chance to write it; the draftsman is the one that wrote the K, he had a chance to clear things up or keep them vague
            •           Draftsman is usually in a stronger position and once he has had these advantages, and its still not clear then we are going to interpret against you
            •           Course of Performance
            •           How have we performed previously under this same K
            •           Have to have repeated occasions (more than one performance to be considered a course of performance)
            •           Have you acquiesced to the same performance previously?
            •           If yes, then there is pretty good evidence that that is what the K meant
            •           Course of Dealing
            •           Sequence of conduct concerning previous transaction between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct
            •           Usage of Trade
            •           What the terms mean in the trade
            •           Can use only if the parties are in the trade (cuz if both aren’t in the trade, then the minds would not have met)
            •           Exception:
            •           Can use trade usage even if one party is not in the trade when the party has actual knowled

ct, there are 2 Houston offices.
            •           Most courts say that you are already outside the document anyways, so may as well take that evidence and clear it up
            •           Modified Plain meaning approach ??
            •           Hear proffer (suggestion of the court) evidence
            •           Example problem: 15.1
            •           File a class action bc of the slow internet. The Defendant says that every customer that signs up must accept the terms of the agreement. They accepted that there was a forum selection clause for Virginia. Besides, Virginia does not recognize the class action.
            •           Looking at reasonable expectations
            •           If your really thinking bout the class action suit, you would read the terms.. you aren’t really thinking bout whats there.
            •           What if she read all that and then saw that there would be class action in VA, she would prob still click I accept
            •           The court says it was there in the contract and you clicked I accept so they can’t argue. Therefore they did accept the terms and are bound by their contract.
            •           Reasonable expectations??? (p. 10 of already outlined notes)
            •           Intent of the parties
            •           Construction
            •           Judge says- some stuff isn’t completely addressed
            •           Can bring in missing terms and say this is what the K means