Contracts II 2012
Parol Evidence Rule/Interpretation
A writing intended by the parties to be the final written statement of their agreement (“integrated”) may not be contradicted by prior or contemporaneous statements, agreements, negotiations, etc., whether oral or written. It bars the introduction of extrinsic evidence, which might alter the terms of the K.
Want to invoke the PER in order to bar the other side from producing evidence that can possibly add or modify more crap in the existing K.
Is the K in writing?
If no, then this is not a scenario where the PER would apply.
Do any of the 5 exceptions apply?
1. Evidence on whether the writing is integrated (final – any evidence will be admitted).
2. Statements of agreements subsequent to the writing.
3. Evidence to interpret the writing.
4. Evidence to show Avoidance Doctrines.
5. Evidence to show that a condition to formation exists.
Does not bar evidence offered for these purposes. PER does not apply.
Is the final writing total (every term of final K is in writing) or partial integration (every term of the final K is NOT in writing?
The judge determines total or partial integration.
1. Unintegrated – final written statement of the parties (ie, draft). The PER will not apply.
2. Partial Integration – the writing is final, but NOT the complete written expression of the parties. May be supplemented with consistent, additional terms based on oral or written extrinsic evidence.
3. Total Integration – the writing is the complete written expression of the parties’ agreement and may not be supplemented by additional terms.
UCC or Common Law (CL)
1. Predominant purpose of the transaction is the sale of goods.
2. Goods are all things which are movable at time of identification to K.
3. At the time of the K, it is movable.
4. Item is or is not a good.
5. Therefore UCC applies.
UCC
1. Assumes the writing is partial.
2. May be supplemented by course of dealing, usage of trade, or by course of performance.
3. May be supplemented by evidence of consistent, additional terms if found to be partial by court.
4. Would it certainly have been in the K?
If yes, then totally integrated and parol evidence IS barred.
Certainly – inevitable, definite, beyond doubt or question.
CL
Williston’s View
1. Merger/integration clause (“this writing contains all the terms of the agreement of the parties” and usu. only between business parties and not long-term friends), unless avoidance doctrine applies.
2. They manifest the parties’ intent that all prior communications are merged into the written agreement (reasonable person standard for intent) and signify total integration (evidence is barred).
2. Would it have been natural for the parties to have included the term in the writing?
Natural – A spontaneous extension of some inherent logic.
If yes, then totally integrated and parol evidence IS barred.
Most courts hold that a merger clause conclusively establishes a total integration, unless the writing is obviously incomplete or if the term is voidable based on fraud, mistake, etc.
Other courts hold that merger clause is merely a factor to consider when determining total integration.
INTERPRETATION
Interpretation is necessary where there is a dispute over the meaning of something already in the K. Interpretation of an integrated writing may require the introduction of evidence.
CL
1. Proffer evidence to the judge to demonstrate that the writing (or a term) is ambiguous.
2. If the judge agrees that there is an ambiguity, introduce evidence into the record to explain the ambiguity.
UCC 2-202
Terms in an integrated writing may be explained and/or supplemented BUT NOT contradicted by:
1. Course of Dealings
2. Course of Performance
3. Trade Usage
Additional Rules
1. Circumstances surrounding the making of the K. (if introduction of evidence is not needed – for all of these)
2. Principal purpose of the contract.
3. K as a whole.
4. A reasonable, lawful, or effective interpretation is preferred to a literal, illegal or unusual one.
5. Favor the public interest.
6. Utterances are to be interpreted most strongly against the party responsible for them.
7. Subsequent conduct of the parties to assist in interpretation.
8. Earlier tentative agreement will be rejected in favor of a later final expression.
9. Absent a contrary intent:
1. Ordinary/popular words are to be given their normal meaning.
2. Technical words or terms of art are to be given their special meaning.
3. Established legal words are to be given their precise meaning.
4. Words of trade, locality, or profession are to be given their particular meaning.
10. Absent contrary intent, inconsistencies in terms are to be resolved by:
1. Specific terms qualify general terms.
2. A word or phrase is to be interpreted in the same way throughout the contract.
3. Correct obvious mistakes of grammar and punctuation.
4. Spelled out
ce and to produce the subject matter of the tender.
Until one party tenders performance neither is in breach.
Performance is executed simultaneously unless not able to do so then the party who has longer period of performance must go 1st
If one party tenders performance, then the other party has obligation to perform
Tender of payment by buyer—payment is due only after seller tenders and completes any delivery unless otherwise agreed to by parties
If no time is stated in the K then it is a reasonable time
goods must be tendered in a single delivery and payment is due upon that delivery unless parties agree to different terms—(if circumstances permit delivery in more than 1 lot then price can be split up according to the # of deliveries)
CL – Cardozo Factors – more factors
Other party must pay, but can still sue for damages.
Do not have to fully perform condition since imposed by court.
Purpose to be served by the clause of the K at issue
Desire to be gratified by the clause of the K at issue
Excuse for deviation from the clause of the K at issue
Cruelty of if adherence to clause is enforced
Cannot purposely/willfully disregard the clause of K at issue
Can be material breach or substantial performance.
UCC – Perfect Tender Rule
Goods tendered must conform to K in every respect.
Exceptions:
Right to Cure
Installment Ks
Unless there is an expressed condition that states otherwise.
Installment Ks
Rejection
1. The buyer may reject any installment that is nonconforming if the nonconformity substantially impairs the value of the installment and the defect cannot be cured
2. Buyer must accept the goods if the seller gives adequate assurances that he will fix the defects
3. May reject the whole installment if the nonconformity substantially impairs the value of that installment (cannot reject entire K)
4. May reject the entire K if the nonconformity substantially impairs 1 or more installments