CONTRACTS II
EISLER
SPRING 2012
Modification
Limits on Modification:
1.Agreement
2.Validation device
a.Consideration (to support promise to say more)
b.unanticipated circumstances (89- w/out consideration)
c.reliance (89 w/out consideration)
d.statute (2-209)- modification needs no consideration to be binding just need good faith
3. S/F (if agreement as modified falls within the S/F)
-whatever term you change had to be in writing to satisfy the one year provision
-2-209
4. NOMC (no modification clause)-If in the original agreement (in writing) a no oral modification clause (signed by both parties) will have to deal with that part in the original. Can WAIVE an NOMC (even orally…)
2-209- How does S/F apply to a modification agreement?
2-209(1)-No consideration needed as long as agreement entered into is in Good Faith
2-209 (3): After Modification: Is this a sale of goods for the price of 500 or more?
-2-201
2-209(4) A waiver
2-209(5) If a party makes a waiver, a party may retract a waiver, unless the retraction would be unjust in view of a material change in position in RELIANCE of the waiver.
2-209(2) A NOMC (no oral modification clause) is there is no writing can go to 2-209(4), 2-209(5) where the Oral modification will act as a waiver
-Modifications of the future may not be conjured up by oral testimony, intended to prevent falsified modifications
* The plain language of U.C.C. § 2-209(3) only requires a satisfaction of the statute if the “contract as modified” is within the statute; it does not require a satisfaction for the modification itself. The original satisfaction of the statute passes through to the contract as modified. Thus, a modification to a contract which initially satisfied the statute does not require a new memorandum
*The MAJORITY that have interpreted 2-209- have said the S/F must be satisfied in respect to the modification NOT the way the court in COSTCO did. There is no evidence that there was an actual modification. Merely because you haven’t changed quantity does that mean that you do not need evidence? No you need evidence or some conduct that refers to the modification that would make the agreement enforceable. If I don't have that I can go to 2-209(4) and (5) but seller must RETRACT the waiver.
*COSTCO is the MINORITY RULE!! 2-209(3) only applies to changes in quantity
EXAM:
At common law-
-89 reliance (consideration issue)
-modification needs to satisfy S/F (AGAIN) looking for a writing
-Can look at a waiver of a term that becomes binding when material reliance
-50K to 55k needs to be in writing but if it is not can call it a waiver of a term unless the waiver is retracted or have material reliance
CH. 5 Parol Evidence and Interpretation
Parol Evidence: Comes into play after the parties have written their FINAL written expression of the agreement, this rule will help us to decide whether a Party may plead and prove prior extrinsic terms: Terms agreed to before the expression was final! (agreements outside the writing made before the writing). Must be PRIOR agreed terms.
-This is not an ORAL evidence rule, this excludes prior ORAL and WRITTEN agreements, prior oral or written agreements and the party wants to SUPPLEMENT part of the final writing.
Parol-Evidence Rule/ Extrinsic Evidence Rule: the principle that a writing intended by the parties to be a final embodiment of their agreement cannot be modified by evidence that adds to, varies, or contradicts the writing.
Parol Evidence Rule/ Analysis
1.Do we have an INTEGRATION? (a final written expression of the terms of the agreement) R2d209: Final written expression of (1/more) terms of agreement (court will decide this based on specificity, intent (do parties intend this to be the final written expression) Does not test completeness.
2. Was there an EXTRINSIC AGREEMENT(at or before the agreement)?
Parties are allowed to negotiate, and throw things out and then write it up. Can I supplement the writing with these terms whether ORALLY or in WRITING. Sometimes people don't want to write everything into the terms of the written agreement.
a. An integration-a final written agreement) UCC §2-202
b. 2-202- Terms with 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
3. Does it CONTRADICT? May NEVER CONTRADICT an Integration: May never
contradict with prior extrinsic terms. From Hypo: May never plead and prove the five year warranty because it contradicts the three year term in the written integration! The loner question does not contradict however…so move on
4. Did the parties intend that the writing is merely incomplete OR was the complete and exclusive writing? Decide the test of COMPLETENESS. If you have a COMPLETE integration- then you cannot supplement OR contradict.
Completeness? Is writing intended by B and S as complete and exclusive agreement of the parties?
(take in no evidence) -Conservative View
Corbin says: You, the party should be allowed to introduce evidence to show that the word doesn’t have its plain meaning because we are looking for the INTENT of the parties. What these parties intended may NOT be what others would intend.
3. What evidence do we use when there is an AMBIGUITY?
-Does this term need to be interpreted?
Whose terms Control? Ask questions like, Which party knew what (intent of the parties)? What should the party(s) have known? Then follow below…
UCC 1-303 (not adopted in OH)
1-303 (c) Usage of trade-what people in the trade do in similar circumstances
-Reasonable parties should expect to be part of the deal.
-Example: ton in the trade is known as 2,200lbs. then it is expected that all instances of ton would be considered 2,200llbs (usage of trade)
1-303(b) Course of Dealing-Sequence of Conduct- what we have done in the past, should be used to interpret our agreement? If in the past we have always said ‘ton’ was 2100lbs and not 2200lbs as in the trade. So in the course of dealing, then ton is now 2100lbs between the parties.
1-303(a) Course of Performance- Repeated performances and the other party acquiesces in those repeated performance when the other party had the opportunity to reject. K says ton, but 1900lbs was delivered multiple times…and never rejected so 1900 is course of performance
1-303 (d) C/P and C/D between the parties or usage of trade in the vocation or trade in which they are engaged or of which they should be aware is relevant in ascertaining the meaning of the parties’ agreement, may give particular meaning to specific terms of the agreement and may supplement or qualify the terms of the agreement. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance.
