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CONTRACTS – Findlater
3 very important questions to ask: before you start your analysis…write it on the test.
1. Does the UCC apply?
If Yesàdetermine whether party is a Merchant §2-104 (b/c law under UCC differs for merc. & non-merchants)
2. Does the Statute of Frauds apply §2-201?
3. Does Parol Evidence rule apply §2-202?
PAROL EVIDENCE RULE- Ch. 5. usage (not a rule of evidence, rule of substantive law)
A. Subject Matter to the Interpreted (What is in the k) –
Evidence of prior (oral or written) and oral contemporaneous agreement may never be admitted to contradict any final writing (integration), and may not even supplement a final writing that was intended by the parties to constitute the complete agmt (total integration).
Note: prior written contemporaneous oral agmt becomes part of the writing—not barred by parol evidence.
Have to worry about PER when parties reduce agreement to writing and there is a promise, assurance or agreement (even written) during preliminary negotiations (before they put it in writing).
EXCEPTIONS to PER:
Validity of Agreement. PER does not bar extrinsic evidence to show that the written agreement is not valid – this evidence would get in. Ex Duress; Unconscionable; undue influence; mistake; fraud.
Clarification of ambiguity:
evidence of prior or contemporaneous negotiations is admissible to properly define and ambiguous term, even one contained in a total integration. The ambiguity may either be apparent on the face of the contract or derive from the underlying circumstances.
Can’t change the meaning:
be sure that the extrinsic evidence is truly offered for the purpose of interpreting an ambiguous clause, not adding or changing an unambiguous one (in which the standard parol evidence rule applies).
Custom:
Being introduced for interpretation purposes, NOT in order to vary the writing.
(1) Course of dealing: evidence about a “pattern of performance b/w the two parties under past contracts.”
(2) Course of performance: how parties behave on the current contract.
(evidence of how parties acted with respect to the past contracts may be used to show how a term in the current contract should be interpreted.
(3) Usage of trade: evidence generally accepted practice or method of dealing in “given industry or field”. Can be introduced to clarify ambiguous terms.
Note: Can always supplements the above even into a completely integrated writing.
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Modification – don’t have to worry about PER b/c it’s after amgt reduced to writing – but will have to worry about consideration. Remember NOM clauses as well. This is after the written k is formed.
(note: PER can be offered to show subsequent modifications of a written K, since the PER applies ONLY to prior oral and written and oral contemporaneous negotiations)
Restatement §209 &§210
Two questions have to ask about PER
(1) Is the piece of paper an integration (final word of the parties)? Is the piece of paper a final expression?
If it not the final word, it is not an integration and no PER bar. More formal the document, the more likely to be an integration. Notes – less likely to be an integration. Can introduce evidence that would contradict or add to what is in the writing because it is not complete.
(2) If it is the final word, is it a complete integration (complete and final expression) or a partial integration? If complete integration – it is final and everything is in it – can’t contradict or add to the writing. If partial integration – final with regard to what is there, but it is only partial – other terms that are part of the deal but not in the writing – can’t contradict what is in the writing, but you can add to it.
(Question of fact: judge decides this question of fact as question of law)
Note: the more formal the document, the more likely its an integration.
§ 209: Integrated Agreement.
(1) An integrated agreement is a writing or writings constituting a final expression of one or more terms of agreement.
(2) Whether there is an integrated agreement is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule.
(3) Where the parties reduce an agreement to a writing which in view of its completeness and specificity reasonably appears to be a complete agmt, it is taken to be an integrated agreement unless it is established by other evidence that the writing did not constitute a final expression.
§ 210: Completely and Partially integrated Agreements
(1) A completely integrated agreement is an integrated agreement adopted by the parties as a complete and exclusive statement of the terms of the agreement.
(2) A partially integrated agreement is an integrated agreement other than a completely integrated agreement.
(3) Whether an agreement is completely or partially integrated is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule.
§ 215: Contradiction Of Integrated Terms
(1) Except as stated in the preceding Section, where there is a binding agmt, either completely or partially integrated, evidence of prior or contemporaneous agreements or negotiations is not admissible in evidence to contradict a term of the writing.
§ 216: Consistent Additional Terms
(1) Evidence of consistent additional term is admissible to supplement an integrated agreement unless the court finds that the agreement was completely integrated.
(2) An agreement is not completely integrated if the writing omits a consistent additional agreed term which is.
(a) Agreed to for separate consideration, or
(b) Such a term as in the circumstances might naturally be omitted from the writing.
Restatement §216 – an agreement is not completely integrated if the writing omits a consistent additional agreed term, which is agreed to for separate consideration or such a term as in the circumstances might naturally be omitted from the writing.
UCC (comment 3) – if they had agreed to this extrinsic term is it one that they would have certainly put in the writing – if so then you have a complete integration and can’t add it.
UCC §2-202
If there is an integration (f
ptions to PER)
Reformation:
If there is a clerical error and a written agreement doesn’t accurately reflect the parties agreement, the aggrieved party can have the K reformed to reflect the prior agreement.
(Mutual Mistake)
Bollinger v. Central Pennsylvania (pg. 377)
P alleged that the original oral agreement required D to remove the topsoil, deposit the waste, and replace the topsoil. D followed this procedure for a while and then ceased doing it. P protested and was informed that the written contract did not require D to follow this procedure.
Rule: A court of equity may reform a written contract when a provision is excluded by mutual mistake. Both parties thought that the term was included in the writing.
One condition to reforming a contract is alleging and proving mutual mistake clearly and convincingly.
Note: Gianni—couldn’t use reformation b/c Gianni can’t clearly and convincingly prove that landlord acted like the amt was part of the K, plus he read the K and knew it wasn’t in the writing.
NOM Clauses (have nothing to do with p/e rule…NOM-deals with modification)
Wisconsin Knife (buyer) v. National Metal (Seller) Twen
Л contracted with Δ to provide raw materials for the manufacture of spade bits. Plaintiff’s purchase orders stated that a contract modification was not binding on plaintiff unless it was made in writing and signed by plaintiff. Defendant failed to deliver on time. Plaintiff issued new purchase orders and nearly two years later terminated the contract where only half of the purchase orders had been delivered. Plaintiff brought a breach of contract suit claiming that defendant violated the terms of delivery.
Held: The court reversed the trial court’s entry of judgment in favor of defendant and remanded for a new trial where the jury instruction indicating that a modification of contract could occur in a manner other than by writing was erroneous where the contract indicated that modification could only occur by writing.
Majority: §2-209(5): applies to different waivers.
Dissent: that’s sily (4) and (5) deals with same wavier.
No Oral Modification clauses. (NOM)
You can’t modify the written agreement with an oral agreement or with an agreement implied in conduct – Can only modify by signed writing.
If you have both a merger clause and a no-oral modification clause –
