Contracts II Outline

CONTRACTS II OUTLINE
I. PAROL EVIDENCE RULE (UCC §2-202)
1. there must be a written contract which was intended by the parties as the final expression of their agreement or some portion thereof
2. applies to all extrinsic evidence (oral or written) made prior to writing or contemporaneously with the writings
3. for the purpose of adding to or modifying the terms of the writing.(contemporaneous writings are usually not barred by the rule).
-the party wishing to exclude this extrinsic evidence will attempt to invoke the parol evidence rule to establish that the prior agreement is not, as a matter of law, art of the legally enforceable K b/w the parties.
-the rule has no application to prove a defense like mistake, duress, lack of capacity etc.
-the rule does not preclude a party to a written contract from proving the existence of a separate distinct contract b/w the same parties (if there are separate agreements, they must have separate consideration); nor does the rule bar evidence that would tend to prove a subsequent modification of the contract (evidence of agreements made subsequent to the signing of a written contract are not subject to the rule); nor does the rule preclude proof of course of performance, course of dealing or usage of trade when offered to add a consistent additional term to a written agreement.
-to apply parol evidence rule- (evidence of prior or contemporaneous writings)
1. determine whether the writing of the parties constituted a final expression of the parties’ agreement at the time it was adopted then determine whether it is a partial integration or a complete integration of the terms to which the parties wished to be bound.
a. if complete integration neither party can offer evidence of extrinsic (additional) terms that there communicated prior to or contemporaneously with the signing of the writing for the purpose of adding to or modifying the terms of the agreement, parol evidence is not allowed.
b. if the writing is found to be a final expression but contains only a portion of the total agreement then there is partial integration and parol evidence is allowed but is limited to the terms that are consistent with the writing and are such that similarly situated people might have considered it unnecessary to include them in the written K.
1. these extrinsic terms must be supported by separate consideration or are terms that the parties naturally intended but were omitted from the writing
2. cannot contradict
3. separate consideration
An oral agreement may vary a written contract:
1. only if it is collateral (independent) in form
2. does not contradict express or implied conditions of that written contract
and 3. consists of terms which the parties could not reasonably have been expected to include in the written contract.
-if the writing contains an integration clause, parol evidence is not permitted.
UCC 2-202 Final Written Expression: Parol or Extrinsic Evidence
Terms w/ respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented
(a)
by course of dealing or usage of trade (1-205) or by course of performance (2-208); AND
(b)
 
Cases:
Mitchill v. Lath
Lee v. Seagram & Sons
Betaco v. Cessna
Val-Ford v. JZ’s Toy World
Paymaster Oil v. Mitchell
Columbia Nitrogen v. Royster
Southern Concrete v. Mabelton Contractors
INTERPRETATION
-interpretation of an oral K is a matter for the trier of fact
-interpretation of a written K is a question of law and is therefore done by the judge and reviewed de novo by appellate court judges.
-the court must determine the subjective intention of both parties and if in conflict, determine the objective intent (what meaning each party should have attached to the communications)
-to do this you can consider plain meaning, the parties’ relationships, course of performance, course of dealings, usage of trade, etc.
-if the terms of a K have been reduced to writing, determination of the meaning of that writing is considered to be a matter of law to be decided by the court rather than a question of fact which would be decided by the jury in a jury trial
-for objective intent, if the language is subject to distinct interpretations, the court must determine what each party should reasonably have expected the terms of the contract to be.
Course of Performance- UCC §2-208
Course of Dealing (1)and Usage of Trade (2)- UCC §1-205
Modification, Rescission and Waiver- UCC §2-209
Cases:
Pacific Gas
Trident v. Connecticut General Life Ins.
Untiedt v. Grand Laboratories
Raffles v. Wichelhaus
Nanakuli Paving & Rock v. Shell Oil
II. CAPACITY OF PARTIES
-total incapacity would render an agreement void
-partial incapacity results in a voidable K at the option of the impaired party.
A. Infants- age of majority varies upon state law.
-the age is 18 in most states.
-agreements are voidable at the option of the minor
-the minor has to pay for the value received, regardless of the minor’s knowledge about the item in question
B. Mental Defects of Illness-
-if the other party to the K was not taking advantage of an apparent mental weakness and if the K is not otherwise unfair, the right of avoidance may be lost to the extent that the K has already been performed.
-K’s made b/c of lack of capacity are voidable; the are valid but are voidable by the minor or the incompetent party.
-there are exceptions for necessity and adjudicated incompetents.
-if there is adjudicated incompetency then the whole world is in notice of the incompetence.
C. Intoxication-
-the party has to have been involuntarily intoxicated but you must first prove that they were intoxicated in the first place and they are treated like someone with a mental incapacity.
Cases:
Petit v. Liston
Ortelere v. Teacher Retirement Board of NY
 
III. AVOIDANCE FOR MISCONDUCT OR MISTAKE
A. DURESS- renders a K voidable
-party who was wrong can ratify or disaffirm (voidable)
-subjective test of duress
-once the duress is lifted then you are free to ratify ro disaffirm.
– requires an improper threat of sufficient gravity to induce the other party to manifest assent to an agreement and assent must have in fact been induced by this threat.
-must be express or implied from words or conduct and must communicate an intention to case harm or loss to the other party.
-the threat must be harmful and there must not be a right.
1. economic duress- a threat to commence a civil action in circumstances where the use of the civil process would be characterized as an abuse of process; or threats not to engage in business dealings with the victim either by refusing to sell goods or refusing to purchase output in particular circumstances
2. physical duress- a threat to commit a criminal or tortious act that will injure the person, family or property of the victim or a threat to institute criminal action to compel conduct
3. psychological duress- a threat to disclose embarrassing facts to other parties or to the community which can constitute blackmail.
-In determining whether a given threat was sufficient to deprive the victim of his free will, the experience, sophistication and other personal characteristics of the aggrieved party are proper considerations.
Cases:
Gallon v. Lloyd-Thomas Co.
B. UNDUE INFLUENCE-(renders contract voidable) a person entered into an unfair transaction induced by improper persuasion.
1. finding that the victim was prevented from exercising free choice in the