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Contracts II
University of Mississippi School of Law
Barnes, Richard L.

Contracts 2
Professor Barnes
Spring 2011
Rules List:
1-303 or 1-205: Course of Dealing/ Usage of Trade for Extrinsic Evidence
201: Objective Interpretation of Extrensic Evidence. Subjective
2-313: Express Warranties
2-314: Implied Warranties (not found in supplement)
2-316: Exclusions of Implied Warranty
344 Damages (Purpose of Remedies)Expectation, Reliance, and Restitution
347 Measure of Damages
351 Damages- Unforeseeability and limitations
356- Liquidated Damages
357 Damages: Specific Performance/ Injunction
359 Damages: Effect of Adequacy of Damages
2-609 Right to Adequate Assurance of Performance
2-610 Anticipatory Repudiation
Seller’s Remedies (From Ch. 7 Sec. 2)
·         2-703
·         2-704- 705- peculiar for sellers
·         2-706- Basic: different than buyer’s (resale)
·         2-708- Market Price: time and price of tender (equivalent to 712)
·         2-709- Market Price Time and Place of tender (alt. to resale)
·         2-710 Incidentals, NO consequential
Buyer’s Remedies
·         2-711- list of remedies
·         2-714 & 2-717- buyer’s
·         2-712- cover in good faith for reasonable commercial standards (normal damages)
·         2-713- market price at the time buyer breached.
·         2-716- Sp. Replevin
·         2-715- Incidentals and consequential damages  (not the end breach, there are others relying)
·         2-718- Liquidated damages
Chapter 5: Sec. 1  Parol Evidence Rule
·         You cannot contradict the writing if it is an integrated or completely integrated agreement.
·         Oral or written evidence not in the contract. (nomenclature)
·         If there is no written agreement the rule doesn’t apply.
Integrated Agreement
·         A binding integrated agreement discharges prior agreements that are inconsistent with the written agreement. (you can’t contradict what is written)
·         You can amend an integrated agreement, but you can’t contradict it.
·         Final expression as to one or more terms is integration.
·         Excludes contradiction, but includes circle of doom, interpretation, and supplementation.
Completely Integrated Agreement
·         A completely integrated agreement within the contract can’t be contradicted. Therefore when there is complete integration parol evidence cannot be used to add to or vary its terms.
·         Completely integrated agreement- something complete and final expression of understanding.
·         Final expression of deal or transaction is completely integrated.
·         These are still subject to circle of doom and interpretation. 214, 217
·         Sometimes it might say “do not consult oral agreement everything agreed upon is in writing.
U.C.C. Rule: 2-202
·         If the additional terms are such that, if agreed upon, they would certainly have been included in the document in the view of the court, then evidence of their alleged making must be kept from the trier of fact.
·         Sales of goods terms are not very complicated therefore there isn’t a lot of things to argue about. Mostly the transactions aren’t unique.
Tests:
1.       Natural Exclusion- Would it naturally be excluded from the document? (CA)
2.       Natural Inclusion- Would it naturally be part of the document? (NY/PA)
a.       When does the oral agreement come within the field embraced by the written one?
i.      This can be answered by comparing the two, and determining whether parties, situated as were the ones to the contract, would naturally and normally include the one in the other if it were made.
3.       Four Corners- Unless you can find that writing within the four corners of the document is ambiguous then parol evidence will not be admitted. This is what most jurisdictions will follow.
4.       Merger clause
California (liberal rule) v. New York/PA (conservative rule)
·         CA- Exclusion- Evidence of oral extrinsic evidence should only be excluded if it contradicts the
o   Is it the kind of thing made in a separate agreement? (Natural exclusion; will it mislead)
o   It must not  be completely integrated.
o   Should listen to it because it doesn’t contradict, it isn’t completely integrated, and would be something naturally excluded.
o   All words can be interpreted and are inherently ambiguous. However not all extrinsic evidence will not be heard by the jury.
o   In order to do this they use the natural exclusion clause.
o   They want to determine what the meaning of the word is, but do they mean the vocabulary definition or the intent.
§  The question of meaning must go through the gatekeeper; the judge.
§  CA finds it unjust to deny them the opportunity to hear extrinsic evidence to interpret the meanings. It would be a reversible error.
o   They are more likely to allow interpretation than they care contradiction or supplementation.
·         NY- Natural Inclusion- If it wouldn’t naturally appear in the contract then it doesn’t matter and will not be admitted.
o   The question of meaning must be found within the

lfax Envelope Corp. v. Local No. 458-3M
o   The union sends a letter of agreement to P that requires certain number of men which is an error in the letter. P agrees to it.
o   Colfax losses because a reasonable person would have known the meaning might have been different. He refused to sign the large agreement, but did sign the summary.
o   Rule: If there are two interpretations and you submit to a patent ambiguity you agree to the most reasonable interpretation.
§  When faced with a patent ambiguity you can’t trust to your own interpretation because there might be another reasonable interpretation.
Sec. 6 Supplementing the Agreement with Terms Supplied by Law: Gap fillers, warranties, and Mandatory Terms
·         Warranties 2312: You can say “as is, no warranty of title” or circumstances that let the seller know there is no warranty.
o   Implied warranty 2314- nothing has to be said about that warranty. MS has greatly disagreed with U.C.C. here. MS allows no way to exclude or modify implied warranty unless it is computer software or cattle, hogs, or sheep and used cars.
o   2316: Exclusions of Warranty- you must show it boldly in order to exclude it. The language must mention merchantability “we hereby waive this merchantability”
·         Koken v. Black & Vetech Construction, Inc.
o   Was this used for its ordinary purpose? Not enough evidence to answer that and since the burden is on P then they lose. Summary judgment was granted.
·         Lewis v. Mobile Oil
o   Rule 2315
o   Implied warranty:
§  That the seller have “reason to know” of the use for which the goods are purchased
§  That the buyer relies on the seller’s expertise in supplying the proper product.
·         South Carolina Electric v. Combustion Engineering
o   No implied warranty if the circumstances surrounding the transaction are in themselves sufficient to call the buyer’s attention to the fact that no implied warranties are made or that a certain implied warranty is excluded.
·         In order to disclaim must be: 1) conspicuous