Christi Henke- KII Outline Summer 2013 (Got an A in this class)
I. PAROL EVIDENCE RULE: substantive law that prevents a party to a written contract from presenting extrinsic evidence that contradicts or adds to the written terms of the K that appears to be whole.
a. Integration (complete or final expression): first question to ask, does the K have an integration in at least one of it terms? Second, is that integration complete?
Note: You can’t go back and try to introduce evidence that is specifically stated in the K, if it wasn’t included, and it is something that would naturally flow in the K, this is the type of evidence we’re looking at to see if we would include it.
i. Integration of (Parol Evidence) Test a.k.a. Collateral Contract Concept—still alive, but not used as widely due to limited info provided:
1. It is a condition to formation: condition has to occur in order for factor to be satisfied (condition precedent)? If so it will go before the court.
2. Is the language contradictory? Then it will not go before the court.
3. Writing/words subsequent: PER does not apply. Will still go before the court.
ii. Williston’s View: Reasonable person approach:
a. Merger Clause: If a merger integration clause exists (e.g. “This writing contains all the terms of the agreement of the parties”), presume integration is TOTAL, unless merger integration clause obtained by fraud, mistake, etc.
b. If there is no merger integration clause, ask: Would it have been “natural” for the parties to have included the term in the writing? If so, PER is barred.
iii. UCC 2-202:
1. There is a presumption of partial integration unless the judge determines that the writing was intended to be a complete and conclusive statement of all the terms of the contract (i.e. a total integration)
2. TEST (if it’s partial): Question: Whether the parties would have “certainly’ included the term in the final writing/signed agreement. If the answer is “yes,” the writing is deemed to be a total integration.
a. Remember that partial or total integration can be explained by 1-205 & 2-208.
i. “Consistent additional terms”
iv. RECAP: Integrated agreements & distinguishing partial and complete: an integrated agreement is one that is complete and final—but the agreement may be a bit “slippery,” and could only be talking about specific terms of the K, or it could be talking about a complete set of promises to be enforced. This is when we look at if it’s partial or complete.
1. Partial: I only have the price and subject in the agreement. But I don’t have other things included that would naturally follow—such as time to be sold, where to be sold, etc. This is when we’re looking at adding terms (exceptions), b/c it’s PARTIAL.
2. Complete: Look for merger or integration terms. This means if they exist, no additional terms can be added.
3. Restatement 213 (Effect of Integrated (COMPLETE) Agreement on Prior Agreements- Parol Evidence Rule):
4. A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them
a. Mitchell: Case w/icehouse on property
5. A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope…
a. One contract occurs, then another one occurs w/past K integrated to wipe out this one.
v. Exceptions to Parol Evidence Rule
1. Evidence on whether the writing is integrated (final statement of the parties). The judge considers ALL relevant evidence to determine whether the writing is integrated.
2. Statements/agreements subsequent to the writing.
3. Evidence to interpret a writing.
4. Evidence to show that a condition to formation of the contract exists.
5. Evidence to show matters of avoidance exists; e.g. fraud, duress, mistake, etc.
b. Interpretation:
i. Two Step Approach- Majority View: Step 1: Proffer evidence to the Judge to demonstrate that the writing (or a term) is ambiguous; Step 2, if the judge agrees that there is an ambiguity, introduce evidence into the record to explain the ambiguity (Pacific Gas & Electric) (* Note: this only occurs if integrated writing requires introduction of evidence for possible admission)
ii. UCC 2-202: terms in an integrated (COMPLETE) writing (dealing with GOODS) may be explained/supplemented (so long as not contradicted) by, inter alia, course of dealing (1-205), course of performance (2-208), usage of trade (1-205) (* Note: this only occurs if integrated writing requires introduction of evidence for possible admission)
iii. Ambiguity Rule: parties agree that the writing includes what it does, they just disagree on what the term in the writing means
1. Courts will construe what is written. So even if you say, “Let’s agree to make it $20,” right before signing a deal that is written for $25, you still owe the $25.
2. Interpretation: UCC: Course of performance, course of dealing, usage of trade; CL: two-step test; written-checks
3. If parties agree on ambiguous terms, court will construe it as the parties agreed—even if it is against a reasonable person standard.
II. CONDITIONS AND PROMISES: if conditions are not clear– or when doubtful whether words create a promise or an express condition– they turn into a promise so that the “breacher” does not escape liability (RII261: Interpretation of Doubtful Words as Promise or Condition- Howard v Federal Crop Insurance Corp- Last provision was construed as a promise instead of condition).
a. Condition= a fact or event—not certain to occur, unless its non-occurrence is excused, before non-performance becomes due—if a condition is not met, no liability is attached to a party
i
t is the direct opposite of material breach (i.e. trivial/immaterial damages). Substantial performance satisfies the condition, although performance is not necessarily completed. The party which claims substantial performance has still breached the K and is liable for damages, but in a lesser amt than for a willful breach (can even be nominal).
a. All breaches can be classified as Material or Minor, describing the magnitude of the breach (using the Cardozo factors)
i. Material breach: less than substantial performance
ii. Minor breach: Substantial performance (Jacob & Young v Kent case)
b. The injured party’s choice of what to do about the breach:
i. Total breach: Terminates the contract (your breach is so bad, I’m firing you)
ii. Partial breach: Preserves the contract (sue for the partial breach)
c. Does the injured party always have the choice? If the breach is material, then the injured party may choose total or partial. If it’s a minor breach, only partial breach is available. If breach is minor, party can only get partial breach.
i. Ex. If the performance is substantial (minor breach), performer can recover the contract price minus damages for the breach (Peevyhouse).
1. Diminution in value test
ii. Full cost of repair for major breach
iii. Ex. If the performance was less than substantial (material breach) performer’s only hope is to recover in QM through restitution minus damages for the breach (Britton v. Turner).
1. Quantum meruit is capped at K price for willful breachers.
d. The Willful Breacher?
i. Cardozo’s View: willfulness is outcome determinative
ii. Restatement view: willfulness is 5th on the list of factors
