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Contracts II
South Texas College of Law Houston
Kelso, R. Randall

This is a contracts 2 outline

1) Intro:
a) The issues in contracts 2:
i) Interpretation-precise terms
ii) Conditions
iii) Impracticability -has something in the performance made the performance impractical?
iv) Damages
v) Equitable remedies
vi) Assignment/delegation-Third party beneficiaries
2) Interpretation
a) parole evidence rule
i) Intro:
(1) In a written contract, can you bring in other evidence that states that the contract is different?
(2) If there is a written contract, and the rule applies, anything before that writing can’t come in to the contract.
(a) Those things are not the best evidence, even if they are previous drafts or other things.
(3) Things that are after the contract is formed and during the course of performance is in, including earlier performance, oral statements, called course of performance evidence. The issue is whether the evidence was before or after the contract was signed.
(4) NOT a rule of evidence (party does not have to object) brought in. The court can throw out non-compliant things on its own (SMJ).
(5) Parole evidence rule can apply to writings that aren’t final contracts. They don’t have to be written contracts. The must be writings about the terms of the contract.
ii) Overview/exam analysis

Exceptions: always do first

Interpretation

Defenses

1) Ambiguity
2) Course of Performance
3) Course of Dealings
4) Usage of Trade

1) Separate K
2) Fraud, Mistake, Duress
3) Deficiency in formation
4) Condition Precedent

Traditional View
exclude the parole evidence by saying ONE of the following conditions exist:

Modern View
include the parole evidence by saying that ALL of the following conditions exist:

1) That it is a complete integration,
2) That the PE contradicts the writing
3) That those things would naturally be expected to be in a writing.

Traditional courts say that parties should look out for themselves

1) That it is only a partial integration
2) That the PE is supplementary and complimentary
3) Language not normally included.
Modern courts are more likely to look after the little guy.

iii) 3 elements of parole evidence
(1) to satisfy and include the information, all three elements must be met. The party trying to keep it out only has to refute one
(2) complete or partial integration (collateral agreement)?
(a) COMPLETE: previous documents will not be considered
(i) All details of agreement are in contract, no other evidence
(b) PARTIAL-PE may be admitted, move to next step
(i) other/collateral port

reme Modern: must find direct contradiction to not allow PE
(4) Would this naturally be expected to be in a writing?
(a) If Yes: PE is excluded
(b) If No: may allow PE because of complements and supplement.
(c) LOOK AT:
(i) how detailed is the writing?
1. If it is a detailed writing, then the parties probably meant to sum up all of the terms in this writing.
(ii) is it easily inserted?
1. If it is easily inserted, then it would have normally have been there.
2. If there is a practical barrier to its inclusion, then it is less likely.
(d) If the collateral agreement is different than the writing, one can always argue that it contradicts the writing, and conversely one can always argue that it only supplements it and does not contradict the writing. ARGUE BOTH SIDES
iv) RS 211 (3):
(1) If PE is unconscionable; the court won’t admit it anyway.
v) Exceptions to PE rule ALWAYS ALLOWED
(1) Interpretations: use PE to aid in interpretation
(a) Course of performance
(i) things that happen before K was made
(ii) never be excluded even if it contradicts stuff that is on contract
(b) Course of dealing in earlier contracts
(i) Past business transactions
(ii) Procedure was done another way/method
(iii) Not PE
(c) Usage of trade
Industry standards