Contracts II Outline

CONTRACTS II – OUTLINE
Professor Plass
Spring, 2010
 
 
§ 1 – PAROL EVIDENCE REVIEW
 
UCC § 2-202
–          Substantive Rule of Law: The writing supersedes all prior agreements; it is the controlling document
–          Rule of Evidence: evidence of prior agreements that contradict the writing is excludable evidence.
o   Course of Dealing
o   Course of Performance
o   Usage of trade → requirement that the practice has some regularity of performance; general business dealings.
–          2-202 → Confirmatory memorandum
 
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:
o   by course of dealing or usage of trade (1-205) or by course of performance (2-208); AND
o   By evidence of consistent additional terms UNLESS the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
 
→ Confirmatory Memorandum
 
Paymaster Oil Mill Co. v. Mitchell
–          ∆ and Π reached an oral agreement in which the ∆ was to deliver 4,000 bushels of soybeans for $3.11 a bushel. A written confirmation was made to corroborate there the oral agreement.
–          The beans ∆ was cultivating were greatly damaged by a drought, and instead of the 4000, ∆ only delivered 1835 bushels, his entire crop.
–          Π, relying on the 4,000 bushels was forced to buy the remaining bushels elsewhere for $3.66 per bushel, and sues for losses incurred.
–          This evidence established a cause of action upon which the Π was entitled to recover, but at trial the ∆ testified on the conversation between the two in explanation and supplement of the written agreement.   ∆ was essentially trying to prove that the agreement was for his entire crop, rather than a set number of bushels.
–          Issue: Can consistent evidence be introduced to explain or supplement?
–          Yes, the written confirmation was not the entire K since the conversation was incorporated into it. The conversation indicates that Π agreed to purchase ∆’s entire crop. 
–          Parol evidence may not be used to contradict the terms of confirmatory memos of a written agreement intended as the final expression of a K, but it might be explained or supplemented by evidence of consistent additional terms unless there be an adjudication the writing was an exclusive statement of the agreement.
–          They have an oral agreement, and the writing is not a confirmatory memo.
–          ∆ wants to introduce parol evidence to show that the agreement was not for the 4,000 but what ever his crops turned out to have been. The introduction of this evidence depends on whether the writing was a total integration (final and complete).
–          He is offering course of performance evidence, that type of evidence is always admissible.
RULE:
–          Even if the writing was final and complete, under the code the evidence of course of performance, course of dealing, and usage of trade would be allowed for explanation or supplement, but not if it contradicts the complete and final writing.
o   Evidence concerning Course of Performance, Course of Dealing, and Usage of Trade is ALWAYS admissible, unless it contradicts.
o   The only time such evidence is not admissible is if the parties expressly say that it is not allowed.
 
→ Unambiguous Writting
 
Columbia Nitrogen Corp. v. Royster Co.
–          Π and ∆ contracted for sale of phosphate. Due to a drop in the price of phosphate Π was unable to resell the phosphate at a competitive price and ordered only part of the scheduled tonnage. ∆ sued for breach of contract.
–          Π defended the first case on the grounds that the K, in the light of usage of trade and course of dealing, imposed no duty to accept at the quoted prices, but the court excluded the evidence about course of dealing and usage of trade ruling them not admissible to contradict the express language of a valid written K.
–          Issue: Is usage of trade evidence be admissible in sale of goods transactions?
–          Yes, the UCC permits the admission of evidence of usage of trade and course of dealings to explain or supplement a K, and even a finding of ambiguity is not necessary for the admission of extrinsic evidence about the usage of the trade and the party’s course of dealing.
–          The K does not expressly state that course of dealing and usage of trade cannot be used to explain or supplement the written K, and is silent about adjusting prices and quantities to reflect a declining market.
–          Since the writing is clear and unambiguous, so the trial court did not allow the evidence.
–          This court disagreed, stating that you don’t need an unambiguous writing to admit such evidence (trade, dealing, performance). The only time it is not admissible is when the K expressly states that it is not allowed.
–          1st hurdle → showing that the writing is not complete and final
–          2nd hurdle → convincing the judge that the evidence does not contradict
 
 
 
RULE:
–          Even if the writing is unambiguous, evidence of usage of trade, course of dealing, and course of performance is always admissible, unless the parties expressly negate the admissibility of the evidence.
 
Southern Concrete Services, Inc. v. Mableton Contractors, Inc.
–          ∆ wants to say that in the concrete trade, even though the K may say a specific amount, it is not fixed and may vary. ∆ wants to qualify usage of trade evidence.
–          To establish an industry wide practice the ∆ needs to show sufficient evidence of usage of trade, not just 3 examples as in this case. 
–          ∆ did not have evidence to show that across the industry it is regular practice to change the quantity terms, he couldn’t qualify the evidence as usage of trade. The court determined that 70,000 meant 70,000. 
–          The evidence cannot contradict the writing.
–          Parol evidence of custom and usage may not be used to modify the terms of an unambiguous contract.
–          §2-202 → usage of trade is a practice that has some regularity of observance; you have to prove that it qualifies in the code as usage of trade -regularity of observance.
 
§ 2 – CAPACITY OF PARTIES
 
LEGAL CAPACITY
 
Infants – Minors:
–          A person remains an infant until the first moment of the day preceding his or her 18th birthday and remains an infant despite emancipation and despite marriage.
–          Contracts by minors are voidable [i.e. minors (or broadly stated: those that lack capacity) have the power to disaffirm], this is an absolute right.
–          Policy: a minor does not have the commercial sophistication to understand transactions and so the law needs to protect him (but it does not apply to a minor or party lacking capacity that proves to have commercial sophistication)
–          The rule seeks to protect the minor’s interest such as his lack of commercial sophistication, knowledge
–          What if minor was sophisticated or had knowledge? → it does not matter, the rule is absolute.
 
Is Infant’s Promise Void or Voidable?
–          A contract made by an infant is voidable at the option of the infant.
–          However, the infant may not disaffirm certain contracts because public policy or a statute so provides or because the infant has done something or promised to do something which the law would