The Parol Evidence Rule

• Applies only to written contracts
• Both parties must have adopted writing as their agreement
• Addresses oral and written communication before or at the same time of the written agreement
  • Agreement occurred after is a modification or new contract
• Doesn't bar all evidence.
  • Exception is sham contracts
• Operates as a two-stage process
  • Admissibility, determining if evidence can be considered
  • Credibility, evaluating the evidence's believability if admitted
  • If both parts are satisfied, the evidence becomes part of the agreement.

Policy Reasons

• The contract should be final and supersede all other agreements
• An agreement after signing can be seen as suspicious

Integration

• If fully integrated, meaning final and complete, no parol evidence is allowed and the contract can't be contradicted or supplemented
• If partially integrated, parol may be admissible, but there's a final objective determination by the court
  • Cannot be contradicted, but can be supplemented.
  • Considers what a reasonable person would do.
  • Mor complex contracts make it more likely to be complete
• In a non-integrated example, no parol evidence is allowed because only one party saw it (memo).

4 Corners

• Only some jurisdictions consider only looking at the four corners of the agreement to determine if it's integrated and exclude parol evidence.

Wilston

• Merger clause indicates the contract is fully integrated
• If there is no merger clause, courts look at the four corners to determine if fully integrated
  • Majority view

Corbin

• Everything is considered to determine intent under all circumstances.
• The merger clause is only one factor
  • Cali Law

Mitchel v. Lath

• Defendant didn't remove icehouse even after orally agreeing to it for the purchase of the house
• There was no merger clause
• Eighmie v. Taylor

Collateral Agreement

• Agreement on the side
• If separate consideration, stands independently as a contract.
• If same consideration, then more susceptible to Parol because it can't stand on its own

Masterson v. Sine (Cali)

• Option to buy was “non-assignable"
• The trustee went bankrupt and needed the land to pay debts.
• The agreement was fully integrated, following the Corbin approach.
• A deed would not have had such an agreement in it.
• Same consideration indicates greater parol susceptibility because the other agreement cannot stand independently.

Parol Evidence and Contracts for Sale of Goods UCC 2-202

• Course of Performance: multiple performances in life of contract (ongoing)
• Course of dealing: Different contracts on more than one occasion
• Usage of Trade: Everyone does the same thing in the trade
• No-Oral-Modification Clauses: Parties can modify anything they want unless specified against

Use of Extrinsic Evidence of the Parties' Intent

• Pacific Gas (Cali)
  • Defendant agreed to replace metal cover and indemnify plaintiff, then plaintiff sued for damages when defendant's work didn't go well.
  • Insurance policy was fully integrated
  • Course of dealings contract
  • Parol needs to show the parties intent in the insurance policy
  • Cali precedent now makes contracting unstable
• WWW Associates (NY)
  • The contract gave sellers the right to cancel and buyers said it was ambiguous because of another part of the contract
  • Cannot introduce evidence to make ambiguities in contract

Trident (Cali)

• Facts: loan to build which said can't prepay in the first 12 years, looking for a way to refinance at the lower interest rate fully integrated agreement
• Parol could be brought in to show ambiguity in the contract and show parties intent and allowed an attack on an integrated agreement and didn't allow an efficient breach STUPID RULE AND HAVE TO FOLLOW PACIFIC GAS
• Efficient breach= party knows consequence of breach and breaches anyways because consequence is less.

Extrinsic Evidence from Commercial Context

• Ambiguity means more than 1 meaning
• Vagueness means dont know what it means

Frigaliment

• Chicken case- what chicken were they talking about
• Breach of warranty for goods that fit description.
• Plaintiff didn't meet burden of proof that chicken was meant in the narrower sense and defendant's understanding of what chicken was did coincide with the contract since they had the agricultural terms in there that said it was that kind of chicken

Hurst

• Custom of trade that 50% of meat scraps actually meant 49.5% also and meant same rate.
• Even though non-ambiguous allows evidence of custom

Course of Dealing, Usage of Trade, and Course of Performance

• Course of performance is under 1-303

• of opportunities in performance

• Look at what they have been doing over lifetime of contract show their intent
• Escalation clause: Price changes if market price goes up
  • Gov contracts don't have because the government is using taxpayer money
• NanaKuli v. Shell
  • Shell had price protected Nanakuli several times in the past.
  • Determined to look at what was done in the past to help determine intent since price protection was in the course of performance

Limits of Objective Interpretation

• Raffles v. Wichelhaus
  • Facts: 2 different ships called Peerless
  • No mutual assent because they were talking about two different ships so there really wasn't even a contract to start with
  • Latent ambiguity can affect assent at the time of contracting.
  • Can always use parol to show latent ambiguity to show it wasn't a sham contract

Terms Supplied by Law: Gap Fillers, Warranties, and Mandatory Terms

Filling Contractual Gaps

• Implied in fact, getting to expectation of the parties and applying the terms in a way that they give effect to the fact of such a common understanding
• Implied in law, pursuing the legal rule rather than by factual inference
  • UCC 2-308 Absence of specified place for delivery
  • UCC 2-305 Open price term

Implied warranty of merchantability

• UCC 2-314
  • A warranty that goods shall be merchantable is implied in a contract
  • the seller is a merchant with respect to goods of the kind
    • Party can be a merchant to some and not others
    • Unless excluded or modified in a way that is consistent with what 2-316 states
• UCC 2-314(2)
  • Goods to be merchantable must at least be such as
    • Pass
    • Iin the case
    • Are fit
    • Run within
    • Are adequate
    • Conform to the purpose
• UCC 2-104
  • Merchant is a person who deals in goods of the kind or otherwise by his occupation holds themselves out as having knowledge or skill peculiar to the practices or goods involved in the transaction or skill may be attributed by his/her employment of an agent

Implied Warranty of Fitness for Particular Use

• Where the seller knows the particular purpose for which the goods are required and that buyer relied on the sellers skill
  • Unless exclude under 2-316
  • Particular purpose is for a specific use by the buyer which is peculiar to the nature of his business
  • Ordinary purpose is the uses which are usually made of the goods in question
• Lewis v. Mobile
  • Facts: replacing hydraulic equipment a bunch of times and the oil was the problem and Lewis had to get a whole new system because of it
  • Mobil knew what the oil was for and Lewis relied on them for it
    • Seller has to realize the purpose intended or that the reliance existed
• Excluding Implied Warranties from the Contract South Carolina
  • Facts: A firehose did not do its job and sprayed heated oil across the surface of a boiler
  • Rule: there was an effective disclaimer because they had talked about it in the emails
    • If they hadn't talked about it then it would have been different
• Express Warranties Keith v. Buchanan
  • Facts: Keith relied on representations made by the boat seller and the brochure to get a boat, and he got a boat that he couldn't sail on the ocean Rule: Burden is on the seller to show that that the representation was not the basis of the bargain and actually reliance on the representation doesn't need to be shown by the buyer

Conditions

• Legally enforceable promise
  • A failure to perform a legally enforceable promise means that one of the parties to the agreement incurs liability for breaching that promise
  • On September 16 I will pay you 100$
• Condition
  • An act or event other than lapse that unless the condition is excused must occur before a duty to perform a contractual promise arises or which discharges a duty of performance that has already arisen Conditions Precedent
  • If you mow my lawn on Saturday I'll give you 100$
    • You mow lawn, condition satisfied
    • You don't mow lawn, failure of condition
• Condition subsequent
  • Insurance duty is discharged if you don't file a claim on time Excuse of condition: failure excused and entitled to money
  • You mow 50% of my lawn and I tell you to leave
• Constructive Concurrent Conditions
  • Buy and sale of car

Effects of Conditions

• Luttinger v. Rosen (Strict Enforcement)

  • Facts: Sale of home was conditioned on buyers obtaining financing and they only went to one bank to get financing and were rejected and the sellers tried to give them another financing option which they refused
  • They met the condition by going to one bank and being rejected for financing they don't have to accept the sellers offer

• Internatio v. Rotterdam

  • Facts: two different shipping ports and one was repudiated
  • Contract was divisible by different ports and just because one was repudiated doesn't mean the other one was too

Problems of Interpretation

• Peacock Construction Facts: payment was conditioned on the architect's acceptance and payment by owner
  • Failure of condition by owner to pay discharges peacock
  • Actually a timing of payment contract because didn't discuss what happens if payment from owner doesn't occur
    • Overruled Gerrits
    • Payment by owner was not a condition precedent because subcontractor would never take on that risk
    • Architect clause is a condition of satisfaction
• Gibson v. Cranage Facts: painter said that the buyer of the painting would not have to pay for the painting if he didn't like it and he didn't like the painting so the painter tried to cure and he still didn't like it
  • Condition of satisfaction and he person who was buying the painting is the only person whose judgment matters on whether he liked thepainting

Conditions of Satisfaction

• Taste, Fancy, and Personal Judgement (Subjectivity, dissatisfaction must be bona fide and real) (Gibson)
• Utility, Fitness or Value that can be measured objectively (Peacock architect clause)
• Excused condition not satisfied because failure of condition

Third-Party Satisfaction

Interpretation and Avoidance of Forfeiture

• Objective standard
• Hicks v. Bush Facts: No merger till equity raised
• Equity raised was the condition of formation and there was no contract till the equity was raised

Constructive Conditions of Exchange

• To be done simultaneously because implied
• Created by courts when silent on exchange method or timing
• Presumption against installments Kingston v. Preston. Facts: Mercer did not give his apprentice the business because he said the apprentice did not give adequate security Rule: giving security was condition precedent to getting business
  • Independent: may recover damages when there is no excuse
  • Dependent: one performance depends on prior performance
  • Mutual: performance at same time The excuse for the independent conditions was that he did not get enough security so the condition precedent was not met thereforehe didn't have to give business.
• Stewart v. Newburry
  • Facts: dispute on payment when already partially performed
  • if there is no agreement as to payment work must be SUBSTAINTALLY performed before payment can be demanded

Consequences of Non-Performance

• UCC Article 2: The Perfect Tender Rule
  • Perfect tender rule= 2-601 If the goods or the tender of delivery fail in any respect to conform to the contract the buyer May
    • Reject the whole
    • Accept the whole
    • Accept any commercial unit or units and reject the rest
• Common Law=lenient
• UCC=Strict, meaning justified rejection from buyer
• Bartus v. Riccardi Facts: the seller gave the buyer a new model of the hearing aud he ordered and after he rejected it because it wasn't comfy they tried to cure and give him another model
• UCC 2-608(1)(b) a. Buyer may revoke acceptance whose non conformity substantially impairs its value to him if the acceptance was Induced by difficulty of discovery or by sellers assurances UCC 2-508 Seller can cure non-conforming product if the time for performance has not yet expired

Wrongful and Ineffective Rejections

• Rightful/Wrongful=substantive
• Effective/ineffective= prodedural
• UCC 2-712 Buyer may cover by making a good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller
  • Cover-k price + incidentals and consequential = damages
• 713 The measure of damages for non delivery or repudiation by the seller is the difference between MP at the time when the buyer learned of the breach and the k price
  • MP is to be the place or tender or in rejection as the place of arrival
  • MP-k price=damages

Revocation of Acceptance

• Jorgenson v. Pressnall- Facts: bought new mobile home and used old mobile home as down payment and there were a lot of issues with the new mobile home that had not been. ixed even though sellers said it was "medium quality
• 2-608 substantially impairs value-subjective and objective, and subjective to you and objective to evidence (money isn't relevant because it is a home but would be relevant if it was a car because lemon laws
• the mobil home was substantially impaired because it was unlivable, so revocation was okay

Forfeiture (doctrine of mitigation)

• One party doesn't get paid at all even when provided some work
  • Must weigh: measure the purpose to be served, desire to be gratified, excuse for deviation, and cruelty of forced adherence Jacob and Youngs v. Kent (KEY CASE ON FORFITURE)
• Facts: used other pipe than reading when the contract specified reading pipe and the house was completely done
• Rule: makes no sense to tear down the whole building and replace because of economic waste and the key for damages is the difference in value: the purpose to be served, desire to be gratified, excuse for deviation, cruelty of adherence departure is one of degree → how material was the degree

Suspending Performance and Terminating the Contract

• Walker and Co v. Harrision. Facts: lease to buy sign and there was a tomato stain on sign that was not cleaned fast enough and he was being insanely annoying so Harrison accelerated note not material enough to justify termination of the contract. Materiality factors: Extent injured party obtained a substantial benefit, Injured party adequately compensated, Extent of part performance, Hardship on party failing to perform, Willful, negligent, or innocent behavior, Party failing to perform will perform
• K&G v. Harris (like stewart v. newburry and CITES CORBIN)- Facts: Wall case- they hit the wall and the GC didn't fire them after they hit the wall Chose to treat wall as partial breach, means Still doesn't have to pay sub contractor because sub did make material breach by not performing in workmanlike manner
• Termination and Notice- Can mitigate damages by giving notice, Avoid a partial breach being a material one New England v. Loranger- Facts: didn't provide enough workers to get job done fast enough, so cancelled contract with the Rule that once there is a reason for termination can't start listing a bunch of other reasons

Mitigating Doctrines

• Divisibility: performance exchanged in life of contract
  • Divided into corresponding pairs of part performance, Objective Gill v. Johnstown
• Facts: Gill was driving logs and lost some of them in a flood- Can break down k and mitigate because the costs of the lumber could be proportioned out and he could get paid for what he did

Restitution

• Where the seller knows the particular purpose for which the goods are required and that buyer relied on the sellers skill, and it is also an Equitable remedy
• Reasonable value not what contract said, Look at benefit conferred then look at reasonable value Brittan v. Turner Facts: Contract for 1 year of labor for 120 and quit after 91/2 months "Unless in contract that only get paid if full performance then can use quantum meruit to get what should have been paid" Doing work is not condition precedent to getting paid, facts mostly aligned with Kirkland v. Archbold.

Waiver, Estoppel, and Election

• Excusing condition- Waivers are expressed or implied- Voluntarily or intentionally relinquishment of a right so you need toOR consent to give up the condition of ones duty but ONLY the PARTY THAT CONDITION PROTECTS CAN WAIVE CONDITION Waivers do not need separate consideration and unilateral in nature so you must LOOK FOR MUTUAL ASSENT TO DETERMINE WHETHER WAIVER ORMODIFICATION

Hinderance

• Doing something to make performing hard
• Prevention: Doing something to not allow performance
  • Cooperation: I need to do this so you can do this

All in good faith

-Expect in k so these things don't happen

• Iron Trade Products v. Wilkoff
  • Facts: Iron trade was purchasing rails and wilkoff didn't deliver the rails so Iron Trade had to buy elsewhere at a higher price and Wilkoff said they couldn't get the rails because Iron Trade bought them up
• Rule: difficulty of performance does not excuse breach of contract
• Prospective Nonperformance Before k started no breach, so you must ensure: Hochster v. De La Tour- People should not remain idle (to mitigate damages)
• Assurity of Due performance is that a Repudiation 1. Before k started/ Before k started/no breach

Remedies for Breach/ Equity/ SP

• Specific performance and injunctive relief are both equitable remedies- Can't get specific performance in personal service ks but can get equitable relief, Equity will only be granted when legal remedy is inadequate Expectation interest/ USE THIS TERM ON FINAL but courts will look at Van Wagner which will determine if Damages could be fixed, no need for specific performance. A final consideration is Campbell Soup/ carrots not unique goods
• Look@ Amaco" facts: sued for special performance 2 get 300 more workers" Rule! Wayyyy Diff for court, not SP.

Measuring Expectation

• Lost Profits & Value
• Dimmeshed Value is a very specific measurement, is where a wall went down.

Avoidability

• Cosden OilFacts:"incentives-delivery" but this not a sale?
• Parker: No duty to mitigate, can it still hurt? Rule is "if the other party had to complete, it has to have done it."

Liquidated, and Punitive Damages

• Limitations on Damages: if expensive --> damages very, but not to exceed completion costs"

Punifitive damages

• Bains LLC: if there is a "criminal malicious or negligt." It MUST defer from a crime. If high enough, the court will cut it down.

Mutual Mistake

Basic Assertions

Facts: failure 2 complt bc building's foundation was f-cknclogged.

RULE: Sanity of K" they AGREED 2 Do thos, just drain dam land.

• Sale of Goods: Diamond Rough; Cow Test.
• Risky Limited Knowledge: Who bears Risk???

Taylor: MUSIC HALL" music hall BURN"

RULE: IMP. CONDITION that hall BE, discharge both pARTiES"

KRELLl: Frustrated: Gov apartment -coronation- didn't discharge contract

Was a event preventing? Y, all? DISCHARGE under 261"

Third parties? Rights

1. First Re-Statements ->Creditor -beneficiary
2. . 2nd- Intended =On fianal-

Lucas v. Hamm

1. RULE: Atty"s can be sued if will is incorrect & messed up"

Delegate of Dooties & Assertions of Rights

: "1. Third Part rights. 2. occurs after K 3. if "Rights Assert, assignee has rigts & can assert against IK for payment,but need PWLS done"

Assertions

1. Voluntary, transfer of existing rites." "Under F of Parties, assign/delegs are 1
2. can't

"Herzo

1. Facts: pay @ first- but stopped"
2. RULE: "" Assignee cant revert right after to the money or it stops

"What to Look for in while studying"

1. Conditions/ Satisfaction 2/. Suspending performances 3/, - Mitigating Doctrine -Divisbility"

"Stuff study (damagewise)

How you see the house","eLecTion & What you work to do""

1-""Is party in position 3. Do Punsih 3. How can make u do a : 4. Incidental / consequence - Look to both 4.3 What happens in Effercent Breach in these -4. Did mistake stop it .Vested Party, & How Can party stop & contract out 4 ALL??

5. Does contract tell to make u do" 4:34 What " All The End, GLUCK .Vested Party, & How Can party stop & contract out 4 ALL??

6. Does contrCt tell to make u do" , & How Canparty stop & Contract all"

All The End, GLUCK.