Contracts II Outline

CONTRACTS II
 
Topics covered:
1) PER 2) Conditions 3) third party K’s 4) avoidance doctrines
 
WEEK 1:
FINZ -15,51,52,118,119,162,182,183 
 
Parol Evidence Rule (PER)
 
·      Definition
a) a writing intended by the parties to be the final written expression of their agreement (i.e. integrated) may not be contradicted by prior or present statements, agreements (extrinsic evidence) whether written or oral
b) Once the parties have negotiated a K and signed, the court will not disturb the K w/o significant reason
 
·      4 basic assumptions:
a) have a written K
b) there are problems that arise with the K. is the writing the K by itself? –or- is the writing + something else = the K?
c) Issue: when can a term outside the writing be added into the writing to become part of the K?
d) The PER is a rule of EXCLUSION (gate around the courthouse) of evidence (if the PER does not apply, the evidence is admissible)
 
·      Unintegrated writing
a) writing not intended to be the final expression of parties (evidence always evaluated)
b) reflects preliminary negotiations (ie drafts)
c) the PER does NOT apply
 
·      Partial integrated
a) the writing is the final expression to terms IN the writing
b) NOT final expression to other terms NOT included in the writing
c) writing cannot be contradicted –but- may be supplemented by consistent, additional terms (CATS)
Ex. a side agreement by parties not reflecting the terms in the K
Mitchell v. Lath – (icehouse) under the collateral approach used to determine integration, majority says PER excludes P’s evidence about removing the icehouse (doesn’t enforce agreement b/c not in writing). It seeks to protect the sanctity of the written K.
 
·      Total integrated
a) the writing is the total and complete written statement of the parties
b) writing cannot be contradicted nor supplemented by CATS
 
·      Determining integration (partial or total)
a) Williston’s view (only need to know)
1) If merger/integration clause exists (“this writing contains all the terms/agreements of the parties”) then TOTAL integration (PER excludes all other agreements)
2) non merger/integrations clause…ask “would it have been natural for the agreement to be entered into the K?”
i) yes= total integrations (PER excludes other agreement)
ii) no= partial integration
3) CATS – would a reasonable person add the consistent, additional term
b) UCC 2-202
1) assume the writing is a partial integration (unless judge determines the writing was intended to be a total integration)
2) would the parties have “certainly” included the term in the writing? (yes= total integration)
3) always explainable/supplemental via 
i) course of dealing – previous conduct prior to making K
ii) usage of trade – any practice commonly accepted in industry/trade (you can always introduce evidence despite the PER)
iii) course of performance – previous conduct under current K
Luria v. Pielet – (scrap metal) UCC approach used to determine integration. The new terms may never be “inconsistent” w/ the written K. The new term was inconsistent w/ the written K. Also, the term would certainly be part of the K. Thus, PER does not exclude the evidence of the K.
 
 
·      Exceptions (PER doesn’t EXCLUDE evidence when:)
a) judge gets to consider ALL evidence (gets to look at anything)
b) agreement made SUBSEQUENT to writing
c) interpretation evidence
d) condition (showing that K arose based on a met condition)
e) avoidance (i.e. signing under duress, PER doesn’t exclude)
 
·      approaching PER
1) is the K in writing?
2) do any of the 5 exceptions apply?
3) is it a final statement of the parties (ie integrated)
4) is the final writing a TOTAL or PARTIAL integration?
i) Total – every term of the final K is in writing (if so, can’t contradict or supplement)
ii) Partial – means every term of the final K is NOT in the writing (if so, can’t contradict, but may supplement with CATS)
 
problem 105 – total integration here, the evidence should not be allowed
problem 106 – agreement made subsequent to writing so PER doesn’t EXCLUDE evidence (only agreements made PRIOR to writing)
 
Lee v. Seagrams – (relocate distributorship) under collateral approach, corporations commonly make side agreements, other parties not involved in the transaction get their rights preserved by separate agreements, and Lee and Seagrams rep were friends all concluding that the term 1) is not excluded by PER or 2) is enforceable. A more liberal view of the collateral approach is taken.
 
Pym v. Campbell – (machine invention) UCC applied to determine integration. The exception says the PER will not exclude evidence when dealing w/ a condition to the forma