Contracts II Outline

Contracts 2
 
Parol Evidence Rule
 
Where the parties to a K express their agreement in writing with the intent that it embody the full and final expression of their bargain (i.e the writing is an integration) any other expression written or oral made prior to the writing, as well as any oral expressions contemporaneous with the writing, are inadmissible to vary the terms of the writing.
 
-Basic function of PER is that it does not define evidence affirmatively admissible it used to exclude evidence which would have been admissible.
 
Exceptions to PER
does not apply to evidence offering to explain meaning of the agreement. (not to be contradicted.) Restatement 213 and UCC 202.
.     2) When writing is a complete integration it cannot be supplemented or contradicted.
      3) Parol evidence does not apply to evidence be effective the agreement was subject 
           to oral condition precedent.
       4) not to be evidence offered to show the agreement was invalid for some reason.
           $214(d) ex. Mistake, fraud, duress, illegality)
       5) Does not apply to evidence that has equitable remedy. 214(e)
       6) Does not apply to evidence introduced to collateral agreement to the parties sec.
        sec. 216 sub (2)
        eg. Seagram case- here the sale of assets was not in the agreement. UCC says its
        admissible
        Cons. Term included if agreed upon would have been in the document.
                
 
Extrinsic Evidence cannot be used to prove consistent terms in the writing and vice-versa
has to do with oral and written.
evidence relating to a contract but not appearing on the Face of the contract but because it comes from other sources, such as statements between the parties or the circumstances surrounding the agreement.
Not admissible to contradict or add to the terms of an unambiguous terms of an unambiguous document.
 
Interpretation- If there is uncertainty or ambiguity in the written agreement=s terms or a dispute as to the meaning of those terms, parol evidence can be received to aid the fact finder in reaching a correct interpretation of the agreement. If the meaning of the agreement is plain, parol evidence is inadmissible.
 
Trying to figure out if a person is bound.
 
Integration depends on the intent of the parties. (Is the writing intended as a Final expression or is the writing a complete or partial integration)
– the more complete an agreement appears the more likely there is integration.
 
1) Prohibit extrinsic on this? (Very conservative, Four corners approach aka Williston)
 2) Accept on extrinsic evidence (Corbin more libel approach in UCC.)
Note Dubner prefers UCC
 
Williston test
1. The agreement must be in form of a collateral agreement
2. It must not contradict express or implied conditions of the written contract
3. It must be one that parties would not ordinarily be expected to embody in the writing.
 
– on integration not to exclude extrinsic evidence only PER prior neg. all operative usages and circumstances surrounding K other than private understanding
Corbin Test
1. In deciding whether or not to include an oral argument that is silent in the express K, Corbin looks ate intentions of the parties and less importance on the actual writing.
 
$213
A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them
A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope.
 
UCC 2-202
A party cannot contradict the writing but he may add consistent additional terms unless
a. there is a merger clause
b. the courts find from all circumstances that the writing was intended as complete and exclusive statement of the terms of the agreement.
-Written K terms maybe explained or supplemented by
a. course of dealing with usage in the trade
b. the course of performance to date, even if the terms appear to be unambiguous
 
Luria-D reneged on K to deliver scrap metal and used PER saying that the written K was conditioned upon getting the steel from a particular supplier.
Held- The presence of an oral condition precedent to a contract calling for the unconditional sale of goods contradicts written contract terms. Reasoning- PER cannot be used when the writing is the final expression.
 
Mitchell v. Lath- P contracts with D to buy a house contingent on oral agreement (D to remove the icehouse)
Held- The Parol Evidence Rule: An oral agreement may vary a written contract only if it is collateral in form, does not contradict express or implied conditions of that written contract, and consists of terms which the parties could not reasonably have been expected to include in the written contract.
 
 
Lee v. Seagram- P had acquired 2 ownership in wholesale an agreed to sell it to D + oral agreement that D will put P sons on at the new distributorship.
Held- Evidence of a collateral oral agreement that does not contradict or cover the terms of a contemporary written agreement may be admitted if the written agreement is completely integrated. Reasoning- 37 yrs of business. The sales contract does not contain an integration clause and that is evidence that the oral agreement was valid
Class notes- integration depends on the wording of the K.
 
 
Ethyl Corp. v. Forcum-D contracted with P to build an addition to the Capital Product Building. P stop cause non compliance but K had no word on compliance. D withheld money.
 
Held- In construing instruments, the express language in the 4 corners of the instrument if unambiguous determines the intent of the parties such that parol or extrinsic evidence is inadmissible to expand, vary, or explain the instrument unless there has been a showing of fraud, mistake, ambiguity, illegality, duress, or undue influence.
 
Claim meaning rule- integrated agreement speak 4 itself where its unambiguous on its face. PER- falsely is irrelevant.
 
Mechanic lien-
 
Pacific Gas v. GW Thomas-D contracted with P to replace upper metal cover which fell. D introduces evidence that this agreement was only for relief to third parties.
 
Held- The test for the admissibility of extrinsic evidence to explain the meaning of a written instrument is whether that evidence is relevant to prove a meaning to which the language is reasonably susceptible. On appeal they allowed the evidence and adopted Corbin view on appeal.
 
Pym v. Campbell- D agreed to purchase P invention. Subject to engineer approval (no). P sued D to enforce agreement.
Held- Parol evidence is admissible to show that there was no agreement formed between parties.
Reasoning -These parties met and expressly stated to each other that the agreement drawn between them would not take effect unless Abernethie was consulted and approved. This evidence should be admissible;
 
Amino contrahendi-intent to be bound against one=s will.
PER- not used to accomplish fraud.
 
 
 
 
Conditions and Promises (Substantial Performance and Anticipatory Repudiation)
Promise
Commitment to refrain from doing something.
 
Unconditional is absolute; a conditional promise may become absolute by the occurrence of the condition. If the
 Promise is unconditional, the failure to perform according to terms= breach.
 
Condition-
An event other than a passage of time, the occurrence or non -occurrence of which will create, limit or extinguish the other K party=s absolute duty to perform.
The failure of a contractual provision that is only a condition is not a breach of K, but it discharges the liability of the promisor whose obligations on the conditional promise never mature.
 
Express Conditions and Implied-in Fact Conditions
 
A. Policy concerns
 
Howard v. Federal Crop Insurance Corp-Heavy messes up the crops but P had insurance and cut stalks but D does not want to pay and claims it was a K in order to get paid.
Two of the subsections did not use the same words.
 
Held- condition leads to forfeiture law aboards to forfeiture. It good to read as a promise.
-remedy administered on a finding that the clause has not been met. Forfeiture liability or damage equity relief or
– Words alone do not control.
-it was condition precedent to comply.
 
Intent of the parties establishes if it is a condition or promise.
 
What is the remedy?
-Liability to cease —–condition
-Damages—————promise
Both———————both (Pym)
 
Jones Associates v. Eastside Properties-P and D got into an agreement. D change the terms but P still fulfilled the condition precedent to payment.
 
Lang. in change order may have been more specific. What we have is a drafting order. Crt. Do not like undue forfeiture.
Intent test- Where it is doubtful whether words create a promise or an express condition, they are interpreted as creating a promise.
 
Omaha Public Power District v. Employers- Kirby an immediacy was to remove power lines but guy ended up being bankrupt. P got it fixed and sought insurance to pay the bill.
 
Held- The provision did not prevent formation of the K, but prevented performance of the agreement requisite of K were not done so can=t bring suit.
 
Bright v. Ganas-servant tried to holla at master wife with 20,000 payment waitng for him.
Held-The court detrmined as a matter of law ” Whethr the servant can collect 20,000 payment of good faith service from his master when his actions though not known by his master whee not total good faith and violates a servant stipulation to respect the master family.
-courts not like forfeiture.
 
B. Condition Precedent v. Condition Subsequent
 
Condition Preced