MBE Contract Law - Interpretation
A rule that prohibits the use of extrinsic evidence (oral or written) of prior or contemporaneous agreements to contradict or supplement the terms of a fully integrated written contract. It preserves the integrity of finalized written agreements.
Define
parol evidence rule
Bars admission of extrinsic evidence of prior or contemporaneous agreements or dealings that contradict/supplement the terms of integrated K’s
Key Terms
Define
parol evidence rule
Bars admission of extrinsic evidence of prior or contemporaneous agreements or dealings that contradict/supplement the terms of integrated K’s
Define
integrated K
K parties intended to be the final expression of their agreement
Define
partially integrated K
K that expresses the parties final agreement about some terms, but not all terms
Define
merger clause
States that K contains the complete and entire agreement of the parties.
Evidence of total integration.
What constitutes prior dealings for the purposes of the parol evidence rule?
Oral negotiations and agreements prior to contract
Written agreements prior to contract
Does parol evidence bar admission of subsequent agreements?
No, the parties may always modify the K
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| Term | Definition |
|---|---|
Define parol evidence rule | Bars admission of extrinsic evidence of prior or contemporaneous agreements or dealings that contradict/supplement the terms of integrated K’s |
Define integrated K | K parties intended to be the final expression of their agreement |
Define partially integrated K | K that expresses the parties final agreement about some terms, but not all terms |
Define merger clause | States that K contains the complete and entire agreement of the parties. Evidence of total integration. |
What constitutes prior dealings for the purposes of the parol evidence rule? | Oral negotiations and agreements prior to contract Written agreements prior to contract |
Does parol evidence bar admission of subsequent agreements? | No, the parties may always modify the K |
When does the parol evidence rule not apply? (i.e. when you can introduce extrinsic evidence?) | K was only partially integrated To show that K does not exist/was never formed (evidence of misunderstanding, mistake, etc) As defense to enforceability (duress, illegality, etc) To resolve ambiguities To prove condition precedent To supplement or explain terms w/ evidence of trade usage/past dealings (UCC § 2-202 - sale of goods only) To help court interpret K by showing parties’ subjective understanding of terms |
What is the UCC’s approach to extrinsic evidence? | Presumption that K’s are partially integrated; allows addition of non-contradictory terms unless the parties would have “certainly” included them (UCC § 2-202) |
What are 4 sources courts use to interpret K’s? | Express terms; Course of performance; Course of dealing; and Trade usage |
Rank the following from most important to least important for K interpretation: Trade usage Course of performance Express terms | Express terms (most important) Course of performance Course of dealing Trade usage (least important) |
Define course of performance | How the parties have interacted in the CURRENT transaction |
Define course of dealing | How the parties have interacted in previous transactions with each other |
Define trade usage | A business custom or practice that is so common and pervasive that it is expected in regards to a certain transaction. Must be proven. UCC § 1-205(2) |
What is the common law default rule for a missing price term? | Reasonable value for the services rendered |
Default common law rule for missing duration? | Reasonable length of time |
Default common law rule if employment K does not specify the duration? | Courts will presume that the employment is “at will,” meaning any party can terminate it at any time |
What is the only essential term in an UCC contract? | Quantity ⚠️ Exception: Requirement or output contacts do not require quantity |
What happens if a UCC K is missing essential terms such as time or price? | UCC § 2-305 “fills the gap” with the missing term because it is presumed the parties intended to include the term |
What is the UCC gap filler for price? | Reasonable market price at the time of delivery (UCC § 2-305) |
What is the UCC gap filler for time of delivery? | Within a reasonable time |
What is the UCC gap filler for place of delivery? | Seller’s place of business |
What is the UCC gap filler for time of payment? | Due at the time and place at which the buyer is supposed to receive the goods |
An ambiguous term will be construed against the ______ | Drafter |