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Complete Statement of Their Agreement, Then Evidence of Prior or Contemporaneous
Complete Statement of Their Agreement, Then Evidence of Prior or Contemporaneous
SPRING 2013
PROF. KUNEY
R2d 216
o Evidence of prior consistent terms can be used to supplement a partially, but
not a completely, integrated agreement, but not to contradict its terms.
The UCC Approach 2-202.
o Basically the same as the Restatement, no contradiction of an integrated
agreement, but we CAN supplement or explain terms using:
o Course of performance, course of dealing, or usage of trade; or
o Evidence of consistent additional terms unless the agreement was
completely integrated.
INTERPRETATION
Traditional Four Corners of the Document Rule
o look for an ambiguity to justify going outside the four corners of the
document; no ambiguity, you are stuck with the words of the document.
The Traynor 2-Step
o We all have a different dictionary in our heads.
o So, provisionally admit the evidence to determine if the meaning is one to
which the contract is reasonably susceptible. If so, it comes in for real.
WARRANTY LIABILITY
General
o A warranty is a statement made about certain facts whereby the warrantor
promises to ensure that those facts are as stated.
o A breached or incorrect warranty will support an action for damages sounding
in contract; standard = strict liability.
o Warranties are risk shifting devices that is their whole point. Fault is
irrelevant to warranty liability.
UCC Warranties
o Express Warranties UCC sec. 2-313
You dont have to say warrant or any other magic words.
A mere description of the goods will do it; the warranty to conform to
the description is implied.
Showing a sample or a model is a warranty that the goods will conform
to it.
UCC 2-313 Issues
When is the statement an affirmation of fact and not just mere
puffing.
Whether it is part of the basis of the bargain something
short of actual reliance perhaps knowledge of the warranty
and rebuttable presumption of reliance.
Cases: Royal Business Machines & Bayliner
o Implied Warranty of Merchantability
UCC 2-314 Read the Statute.
Unless excluded or modified (2-316) warranty of merchantability is
implied if seller is a merchant for those goods.
2-314(2) The laundry list of merchantability.
Cases: Bayliner, Am. Cyanamid, GM v. Brewer, Suminski.
o Warranty of Fitness for a Particular Purpose
UCC 2-315 Read the Statute.
If seller knows of buyers particular purpose and that buyer is relying
on sellers expertise, the warranty arises.
Cases: Lewis v. Mobil Oil, Bayliner
Exclusion or Modification of Warranties
o UCC 2-316(1)
exclude or modify merchantability, must use that word and, if in
writing, do it conspiciously.
o UCC 2-316(2)
sufficient to say there are no warranties beyond those expressed
above.
o UCC 2-316(3)
But, you can use common language to exclued: As is, etc.
And inspection or failure to inspect when that ought to have disclosed
the problem does it too.
Exclusionary Clauses re Warranties
o UCC 2-719(1) (a)
One can limit remedies available for breach of a warranty
ex. Return and refund, return for repair or replacement, etc.
o UCC 2-719(2)
limits enforcability of exclusionary clauses if they cause the remedy to
fail of its essential purpose.
o UCC 2-719(3)
Consequential damages can be limited unless unconscionable. Prima
facie unconscionability to limit damage to the person in consumer
transactions.
ANTICIPATORY REPUDIATION
Overview
o Anticipatory Repudiation is notice of an intent by the other party to breach.
o It can be express or implied.
o Express repudiation is a clear, positive, unequivocal refusal to perform.
(marry someone else, sell house to someone else)
o An implied repudiation results from conduct where the promisor puts it out
of his/her power to perform so as to make substantial performance impossible
(or total breach inevitable).
o Simple rules that are hard to apply in real life! (have to ask for assurances)
Anticipatory Repudiation Options of the Non-Repudiating Party
o When a promisor repudiates, the other party has an election of remedies:
-- Treat the repudiation as breach and immediately seek damages or
other remedies; or
-- Await the time for performance, exercising remedies then, or
suffering retraction and performance by the other should they change
their mind.
UCC Overlay on Repudiation
o UCC 2-609 and 2-610.
o 2-609
reasonable insecurity, use a writing to request adequate assurances of
performance. If they are not provided in reasonable time, not to
exceed 30 days, you may treat it as repudiation
o 2-610
repudiation leads to the right to:
Resort to remedies for breach (even if one told the other side
one would wait for their performance);
Suspend performance or identify goods to the contract or
salvage unfinished goods.
Retraction of Anticipatory Repudiation
o UCC 2-611
Retraction possible up to the time for performance unless the other
party has cancelled or materially changed position or considered
repudiation final.
Retraction may be by any reasonable method; must include assurances
if requested under 2-209.
Retraction reinstates the contract with due adjustment for delay
caused by repudiation.
IMPRACTICABILITY AND FRUSTRATION OF PURPOSE (EXCUSE OF PERFORMANCE)
Overview
o Impossibility old standard; if really impossible, then excuse performance.
Performance being possible = constructive condition.
o Impracticability modern standard, if it is just really tough, cost alone almost
never enough, especially a less than 100% increase.
o Frustration of Purpose -- Different.
Occurrence of some unanticipated event or circumstance that renders
the basic purpose of the contract impossible or pointless. Basic
purpose = constructive condition.
If the event that causes the problem was or might have been
anticipated and guarded against (i.e., its risk could have been
allocated between the parties), then do not excuse performance.
POLICY
Policy is a Fancy Word for Reasons Why We Do The Things We Do
Freedom of Contract
Freedom of Alienation
Economic Efficiency
Allowing (or Encouraging) Parties to Plan their Affairs and Allocate Risk Themselves
Deterrence
Efficient Administration of Justice