1 George Mason School of Law Contracts II Terms F.H. Buckley
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So now we have an enforceable contract But what is its content?
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Identifying the Terms and Interpreting them Identifying: what
are the terms Interpreting: what do they mean? 3
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What happens where there is a writing? First question: Is this
a binding contract? 4
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What happens where there is a writing? Unsigned terms
Birmingham TV v. Waterworks at 431 5
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The effect of a signature Fraud in the factum? Curtis v. Curtis
at 437 6 Justin Bieber signs an autograph
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So assume we have a contractbut what are its terms? 7
Identifying the terms 7
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The Parol Evidence Rule Do we look outside the written
contract? Oral statements Course of dealings Trade customs Implied
terms 8
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The traditional Parol Evidence Rule Burke at 549 in Masterson
Parol evidence is not admitted to add to, vary or contradict the
writing 9
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The traditional Parol Evidence Rule Burke at 549 in Masterson
Parol evidence is not admitted to add to, vary or contradict the
writing The four corners rule: a presumption of full integration
that excludes oral and other evidence 10
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Completely integrated agreements Partially integrated
agreements Non-integrated agreements 11 How would the Restatement
change this 11
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Completely integrated agreements: Four corners rule: cant add
to Partially integrated agreements Can add to but cant contradict
Non-integrated agreements Anything goes 12 How would the
Restatement change this 12
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Is the agreement integrated or non- integrated? 209(1) An
integrated agreement is a writing or writings constituting a final
expression of one or more terms of an agreement. Otherwise parol
evidence admitted 13 Non-integrated agreements 13
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Is this an integrated agreement? 209(3) Where the parties
reduce an agreement to a writing which in view of its completeness
and specificity reasonably appears to be a complete agreement, it
is taken to be an integrated agreement unless it is established by
other evidence that the writing did not constitute a final
expression. 14 Integrated Agreements 14
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Is this an integrated agreement? 209(3) Where the parties
reduce an agreement to a writing which in view of its completeness
and specificity reasonably appears to be a complete agreement, it
is taken to be an integrated agreement unless it is established by
other evidence that the writing did not constitute a final
expression. Does this always permit oral evidence? 15 Integrated
Agreements 15
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Restatement 210(1) A completely integrated agreement is an
integrated agreement adopted by the parties as a complete and
exclusive statement of the terms of the agreement. 16 Complete
Integration 16
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Restatement 210(1) A completely integrated agreement is an
integrated agreement adopted by the parties as a complete and
exclusive statement of the terms of the agreement. So no parol
evidence of any kind: Cant add to, vary or contradict 17 Complete
Integration 17
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Restatement 213(2) A binding completely integrated agreement
discharges prior agreements to the extent that they are within its
scope. I.e., cant add to, vary or contradict 18 Complete
Integration: Cant Add to 18
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Restatement 210 (2) An agreement is not completely integrated
if the writing omits a consistent additional agreed term which is
(a) agreed to for separate consideration, or (b) such a term as in
the circumstances might naturally be omitted from the writing. 19
Partial Integration 19
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Restatement 210 (2) An agreement is not completely integrated
if the writing omits a consistent additional agreed term which is
(a) agreed to for separate consideration, or (b) such a term as in
the circumstances might naturally be omitted from the writing. So
oral evidence can add to the terms 20 Partial Integration 20
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Whether completely or partially integrated: 215 Except as
stated in the preceding Section, where there is a binding
agreement, either completely or partially integrated, evidence of
prior or contemporaneous agreements or negotiations is not
admissible in evidence to contradict a term of the writing. 21
Partial Integration: Cant contradict 21
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Restatement 213(1) A binding integrated agreement discharges
prior agreements to the extent that it is inconsistent with them.
I.e., cant contradict a completely or partially integrated
agreement 22 Partial Integration: Cant contradict 22
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Restatement 216(1) Evidence of a consistent additional term is
admissible to supplement an integrated agreement unless the court
finds that the agreement was completely integrated. 23 Partial
Integration: Can Add to 23
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Can we look behind a signed written contract for the terms of
the contract? So the traditional Parol Evidence Rule survives for
completely integrated agreements but only in part (cant contradict)
for partly integrated agreements 24
Limits to the Parol Evidence Rule A agrees to sell his house to
B in a signed agreement on Feb. 20. On the same day A sells a
painting to B for $400 in an oral agreement. Can the oral agreement
be enforced? 26
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Collateral Contracts A agrees to sell his house to B in a
signed agreement on Feb. 20. On the same day B sells a painting to
A for $400 in an oral agreement. Problems? Two entirely distinct
contracts may be made at the same time, and will be distinct
legally. Williston at 543 27
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Collateral Contracts Restatement 213(2) A binding completely
integrated agreement discharges prior agreements to the extent that
they are within its scope. 28
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Collateral Agreements The test in Mitchill v. Lath 542 29 Ice
House
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Alexandria, Payne and Commerce Street 30
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Collateral Agreements How is this like my example of the
painting? 31
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Collateral Agreements What is the test of a collateral
agreement? 32
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Collateral Agreements The test in Mitchill v. Lath In form a
collateral agreement 33
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Collateral Agreements The test in Mitchill v. Lath In form a
collateral agreement Cant contradict the written agreement 34
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Collateral Agreements The test in Mitchill v. Lath In form a
collateral agreement Cant contradict the written agreement The
collateral agreement would not ordinarily be embodied in the main
agreement 35
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Collateral Agreements The test in Mitchill v. Lath In form a
collateral agreement Cant contradict the written agreement One that
would not ordinarily be embodied in the writing Andrews: s fail no.
3 and maybe no. 2 And why is that? 36
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Collateral Agreements The collateral agreement would not
ordinarily be embodied in the main agreement Restatement 213(2) A
binding completely integrated agreement discharges prior agreements
to the extent that they are within its scope. 37
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Collateral Agreements 38 Restatement 216(2) An agreement is not
completely integrated if the writing omits a consistent additional
agreed term which is (a) agreed to for separate consideration, or
(b) such a term as in the circumstances might naturally be omitted
from the writing.
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Collateral Agreements Would the ice house covenant ordinarily
or naturally be found in the land sale contract? 39 Chief Judge
Irving Lehman 39 Judge William Andrews
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Collateral Agreements What about a parol warranty on a sale,
per Andrews? 40
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Masterson v. Sine 546 41 Chief Justice Roger Traynor Escola v.
Coca-Cola Jones v. Ahmanson Pacific Gas infra Perez v. Sharp
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Masterson v. Sine 42 Chief Justice Roger Traynor Justice Louis
H. Burke
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Masterson What was the contract? 43
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Masterson DallasMedora 44 Sale Option to repurchase
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Masterson DallasMedora What was the oral modification? 45 Sale
Option to repurchase
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Masterson What was the oral modification? Dallas reserves an
option to repurchase which does not convey to his assigns (i.e.,
trustee in bankruptcy) 46
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Masterson What happens if an agreement is fully integrated per
Traynor? 47
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Masterson What happens if an agreement is fully integrated per
Traynor? Parol evidence cant be admitted to add to or vary terms
48
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Masterson How to tell if a writing is completely or partially
integrated per Traynor? 49
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Masterson How to tell if a writing is completely or partially
integrated per Traynor? Any such collateral agreement must itself
be examined? 50
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Masterson How to tell if a writing is completely or partially
integrated per Traynor? So can a court ever restrict itself to the
writing? Or was this about the absence of a merger clause? 51
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Masterson What was the oral modification? How to tell if a
writing is completely or partially integrated per Traynor? The
conception of a writing as wholly and intrinsically self-
determinative is impossible: Wigmore 52
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Masterson What does it means to say that the Parol Evidence
Rule is a rule of substantive law and not of evidence? P. 549
53
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Masterson Are Burkes charges correct? The change contradicts a
term which would ordinarily be supplied by operation of law.
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How does the Restatement handle this? Which way does the
Restatement come down? Traynor or Burke? 55
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How does the Restatement handle this? 214. Agreements and
negotiations prior to or contemporaneous with the adoption of a
writing are admissible in evidence to establish (a) that the
writing is or is not an integrated agreement; (b) that the
integrated agreement, if any, is completely or partially
integrated; (c) the meaning of the writing, whether or not
integrated; (d) illegality, fraud, duress, mistake, lack of
consideration, or other invalidating cause; (e) ground for granting
or denying rescission, reformation, specific performance... 56
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How does the Restatement handle this? Which way does the
Restatement come down? Traynor or Burke? Cf. 210(3) comment: a
writing cannot prove its own completeness 57
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58 George Mason School of Law Contracts II Terms F.H. Buckley
Not for sharing [email protected]
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Last day The evisceration of the parol evidence rule in
California 59
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How does UCC 2-202 handle this? Terms with respect to which the
confirmatory memoranda of the parties agree or which are otherwise
set forth in a writing intended by the parties as a final
expression of their agreement with respect to such terms as are
included therein may not be contradicted by evidence of any prior
agreement or of a contemporaneous oral agreement but may be
explained or supplemented (a) by course of dealing or usage of
trade or by course of performance; and (b) by evidence of
consistent additional terms unless the court finds the writing to
have been intended also as a complete and exclusive statement of
the terms of the agreement. 60
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How does UCC 2-202 handle this? Comment 3: Admit oral evidence
unless it would certainly have been included in the writing 61
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Compare to the common law standard Admit parol evidence if the
terms would naturally be made as a separate agreement: Restatement
216 UCC 2-202 is more ready to admit parol evidence: Admit unless
the terms would certainly have been included in the agreement
62
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What can be admitted as parol evidence 63 Terms that would not
certainly be included in the agreement: UCC Terms naturally made in
a separate agreement: Restatement
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How does UCC 2-202 handle this? What happened in Hunt Foods 562
64
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How does UCC 2-202 handle this? What happened in Hunt Foods 562
How was this an Article 2 transaction? 65
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How does UCC 2-202 handle this? What happened in Hunt Foods 557
George Doniler 66 Eastern Can 73% Hunt Foods Asset purchase
agreement
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How does UCC 2-202 handle this? What happened in Hunt Foods 557
George Doniler 67 Eastern Can 73% Hunt Foods Option to purchase
stock
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How does UCC 2-202 handle this? Hunt Foods What was the
allegedly omitted term? 68
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How does UCC 2-202 handle this? Hunt Foods What was the
allegedly omitted term? Option to be exercised only if Doliners
shopped around 69
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How does UCC 2-202 handle this? Hunt Foods What was the
allegedly omitted term? Did Hunt admit it had conceded the oral
term? And why might Hunt have rejected this? 70
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How does UCC 2-202 handle this? Hunt Foods How did the court
interpret UCC 2-202? 71
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How does UCC 2-202 handle this? Hunt Foods What was the
allegedly omitted term? It is not sufficient that the existence of
the [oral] condition is implausible. It must be impossible. 72
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How does UCC 2-202 handle this? Hunt Foods Were these
sophisticated parties? 73
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Can the impossibility standard be met? Snyder 565 What was the
alleged omitted term? 74 Twin Lakes Garden Apartments Beltsville
MD
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Can the impossibility standard be met? Snyder Is a cancellation
clause inconsistent with the written contract? Why might Greenbaum
have wanted to exclude unilateral exit rights? 75
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Can the impossibility standard be met? Snyder Is a cancellation
clause inconsistent with the written contract? Why was the Hunt
Foods reasoning rejected? 76
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Can the impossibility standard be met? Snyder Is a cancellation
clause inconsistent with the written contract? The courts standard:
an absence of reasonable harmony 77
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Can one bargain around this? Traynor at 547: The instrument
itself may help resolve the issue 78
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Can one bargain around this? Traynor at 547: The instrument
itself may help resolve the issue But Any such [oral] collateral
agreement itself must be examined to determine whether the parties
intended [it] to be included 79
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Can one bargain around this? Traynor at 547: Are we running
into a rule of paternalism here? 80
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Can one bargain around this? Traynor at 547: Should the parties
be permitted to bargain back into the parol evidence rule? 81
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Can one bargain around this? Traynor at 551: Should the parties
be permitted to bargain back into the parol evidence rule? And just
how would they do this? 82
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Can one bargain around this? Traynor at 551: Should the parties
be permitted to bargain back into the parol evidence rule? And just
how would they do this? Cf Eisenberg and Miller at 566 83
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Merger Clauses: UAW at 553 84 Doral Resort and Country Club,
Miami
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Merger Clauses: UAW How was the merger clause phrased? 85
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Merger Clauses: UAW How was the merger clause phrased? What was
the alleged omitted term? 86
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Merger Clauses: UAW You tellin me I should stay at a scab
hotel!!! Concerned Union Executive Nix 87
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Merger Clauses: UAW Roushs evidence 88
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Merger Clauses: UAW Markman: Can the parties bargain around the
threshold question of whether a contract is completely integrated
with a merger clause? 89
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Merger Clauses: UAW Markman: Can the parties bargain around the
threshold question of whether a contract is completely integrated
with a merger clause? What was the source of the unfairness to the
successor corporation? 90
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Merger Clauses: UAW Can you think of something the UAW could
have done to satisfy its concerns? 91
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Merger Clauses: UAW Can you think of something the UAW could
have done to satisfy its concerns? Markman: The Parol Evidence Rule
gives the parties the incentive to cure the problem in the express
contract 92
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Merger Clauses: UAW What was the allegation of fraud? 93
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Merger Clauses: UAW What was the allegation of fraud? Did Carol
Management falsely represent that the union clause was in the
contract? Or that there was no merger clause? 94
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Merger Clauses: UAW What was the allegation of fraud? Did Carol
Management falsely represent that the union clause was in the
contract? Or that there was no merger clause? Keeping mum about
plans for sale of the hotel? 95
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UAW On Holbrooks analysis, what does a merger clause do?
96
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UAW On Holbrooks analysis, what does a merger clause do? Cf.
Restatement 216, cmt e: Merger clauses are not controlling 97
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Merger Clauses: UAW Recall Danann on merger clauses and fraud
at 428 A Danann clause negatives reliance on an representation
98
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UAW Does a merger clause always work? Why not in Seibel at 561
99
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UAW How would Markman have decided Hachmeister at p. 557?
100
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So when can parol evidence be introduced? 101
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So when can parol evidence be introduced? Always, it the PER is
simply a rule of evidence Traynor, Markman 102
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So when can parol evidence be introduced? When the added term
would certainly not have been included in the writing: UCC 2-202
103
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So when can parol evidence be introduced? When the added term
would not naturally have been included in the writing: Restatement
216 104
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So when can parol evidence be introduced? When the agreement is
tainted by fraud as to its execution or to the presence of a merger
clause Unless there is a Danann clause? Restatement 214(d):
Illegality, fraud, duress, mistake 105
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So when can parol evidence be introduced? Subsequent
modifications UCC 2-202--Terms with respect to which the
confirmatory memoranda of the parties agree or which are otherwise
set forth in a writing intended by the parties as a final
expression of their agreement with respect to such terms as are
included therein may not be contradicted by evidence of any prior
agreement or of a contemporaneous oral agreement but may be
explained or supplemented 106
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So when can parol evidence be introduced? Oral conditions:
Restatement 217 E.g., this agreement is not operative if 107