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SUNY Buffalo Law School
Schlegel, John Henry

SCHLEGEL! Spring 2011


· Law starts in contracts and ends in bankruptcy, in between we do a lot of arguing about money

o People doing things for allegedly voluntary/punitary gain

· FRIGALIMENT IMPORTING CO. (Chicken Case = question of knowledge/good faith)

o PP: To understand substance, must know procedural posture!

§ Trial level since at district court, they’ve heard evidence, issuing decision

o 2d page, chicken is “ambiguous, different meaning between different people

o Agreements are possibly facts in the world in which contracts are written

§ Can be written or verbal

o Business transactions: expected to have some knowledge, under what rubric was this classification talked about by the judge

§ One source they mention is USDA Regulations, based also on language in the contract and word usage to determine intent of parties

§ Trade Usage of term is designed to answer the usage question

o How would you weigh the trade usage? Evaluate testimony of witnesses

§ Weight? Credibility, look at their dealings

§ P=Strasser: Large buyer, negotiates deals between NY & Swiss companies

· Here, Stov must be a middle man, just buying and selling

§ P=Niesielowski: seller/officer/supplier of check, a step away from the parties

§ P=Dates: Employee of poultry trade, 2 or 3 steps away from transaction

§ D=Weininger: Operates chicken eviscerating plant, chicken is everything but turkey, duck, or goose

· Relationship to trade, guts chickens = he doesn’t care if they are boilers, fryers or stewers, doesn’t pay attention to the chickens

§ D=Sadina: Food inspector, makes sure food meets regulation, would verify meats

§ P’s witnesses probably more reliable, but they specify when they buy!

o Assuming both companies are acting in Good Faith when making the contract, buyer would check with others before purchasing, $33/lb. is about right for stewer

o Bauer: noob, no experience as new to the trade

§ How to build a business? Eat a few cents and create relationships

o Communication/language between the parties is a breakdown throughout ordeal

o Seller, second cable he distinguished broiler and chicken, Good Faith?

§ Chicken is something else other then broiler according to the table

o Bauer did ask Stov to specify to the type of chicken, he replied “any type”

§ Stov would get a commission in swiss francs as worked for Czech gov’t

o Assumption of good faith is plausible!

o Bauer bought from Niesielowski, who asked twice about the kind of chicken so he was suspicious

§ “Knew, or should have known” classic phrase for knowledge in law

· What gets proven and what seller should have known/good faith

o Contract construction is for the court, unless the language is ambiguous

o AMBIGUOUS(conclusions, not premise)

§ YES? – Testimony – Yields Argument

§ NO? – Argument

o Argument is whether or not the testimony proves a particular means


o Using notion of bad faith to establish direct of which ambiguous terms construed

o Want to show “that person acted in bath faith without ever uttering those words”

§ Switch will then go on or off (yes or no)


· OUTLET EMBRIODERY (How business men would read them)

o Letters between P and D were from one merchant to another, they are to be read as business men would read them

o Court supplies meaning if it’s a matter of law or question in fact, not general

o Ambiguous language again, how to understand tariff

o Also good/bad faith but set aside

§ Assume business people didn’t act appropriately because the seller backed out, they were responsible for creating the tariff language

§ Now, seller is arguing that there is no contract, saying “the contract that I created is not complete because the price was not fixed”

· Cardozo: Bad behavior junior!

§ Buyer(GF) of courts I have no problem is price increases b/c of tariff

· AND already had business dealings, “Avoid last season’s delays”

· HURST V. LAKE & CO. (Like chicken, dealing w/ meaning of custom terms)

o Ambiguity in how trade terms understood, look at custom of trade to decipher

o ALSO, like chicken case because testimony had been heard

o We don’t know what good faith is, just its absence, much like (un)reasonable, subjective/objective, (un)ambiguous, etc.

§ Importance is what is going on, no on exact meanings of term

o Letter said ambiguous to “less than 50%” as trade custom, includes 49.5%!

o Since no evidence had been discovered, case would have to be sent back to trial

o Hard to determine wha

on here” is the center of the course,,, THUS facts, facts, facts, facts


o Majority says not clear on contract what his “guaranty” means

§ Document missing here, a pleading error on part of the P

· What was the “telephone conversation” that happened

o What does minority mean by unambiguous? 2/3 judges said ambiguous

§ Caught between the two, am I going to get paid, are you vaguely authorized otherwise

o Moran: is this really a lumberyard, do you really sell anything or pay any credit?

§ Dubious about finances learned from in heath, so knowing what the letter means may turn on state of finances and telephone call

§ Going into bankruptcy, probably not just statement of finances

o Difficulty is that we need more evidence to know what’s going on

o What is necessary to show ambiguous? Statement of facts and recommendation, in what way to do a “personal guaranty,” may need something explicit

o P is only saying “I get to go to trial”

o So, if not ambiguous, judge is trying to say what unambiguous guaranty looks like, may be exact or resembling promissory note w/ explicit specifications


o Like EMBRY as both are appeals of jury/bench trials, like HARDWARE b/c of ambiguous/agent & like Frigaliment b/c both had witnesses

o Testimony = Frigaliment were trade witnesses, here the witnesses are directly involved, no question regarding trade usage


o Question is dealing w/ AA Homes, individually or as corporation

§ Comptroller=ignorance, never looked at job, will lose employment if testifies else, never explored, whoever typed up ledge card left off “INC.”

o Haggerty=background manager, only knows person he talks to

o What does the company know, what does AA think needs to be proven to escape personal liability