CONTRACTS II

I. Parol Evidence
1. Did someone make an oral/written statement about the deal?
2. Did this statement make it into the K?
3. Is the K integrated? If so, partially or completely?
b. Applies where:
i. The court determines the written K is the final agreement (integrated); AND
ii. Oral/written statements were made by the parties prior to signing the K; OR oral statements were
made at the singing of the K
c. Look for merger clause
d. PER doesn’t apply
i. Evidence that resolves ambiguities in the K
ii. Evidence that impacts collateral agreements (normally/naturally be in a separate document)
iii. Fraud, illegality, mistake, undue influence
iv. Consistent additional terms where there is only partial integration
e. PER applies
i. Parties arguing about inconsistent terms unless it’s a clerical error
ii. Consistent additional terms where there is complete integration
II. Interpretation
a. Court will look at K language to determine what a term means when disputed
i. Is the word susceptible to more than one meaning?
ii. If yes, extrinsic evidence should be allowed to determine if more than one meaning
1. Relative meaning of words & no judge linguistic background
b. Hierarchy for evidence
i. Express terms—course of performance—course of dealing—trade usage
III. Damages
a. Expectation—the NowNow and if the K was fully performed
i. Consequential damages—extent they are foreseeable
1. Loss of primary/secondary profit, goodwill
b. Reliance—return party to pre-K space
i. Used when losing-K or hard to calculate damages
c. Restitution—value services conferred on the breaching party
i. Must enrich unjustly; cannot be gratuitous; measurable
ii. Not recoverable in excess of the K
d. Liquidated—good when reasonable and damages difficult to prove
e. Specific Performance—apparent inability to cover; peculiarly available
f. Limiting Doctrines
i. Certainty—reasonably certain damages
ii. Foreseeability
1. Determined at time that the K was entered into (allocation of risk)
2. Objectively foreseeable or subjectively known
iii. Avoidability—duty to cease performance and mitigate
IV. Damages under UCC
a. Buyers Rights
i. Perfect Tender rule—perfectly conform
ii. Accept
1. Reasonable time: say accept, fail to reject, consistent actions
iii. Reject
1. Reasonable amount of time; duty to hold if time to inspect needed
iv. Revoke
1. Nonconforming goods have not been replaced; reasonable time
2. Occurs after buyer discovers or should have discovered substantial nonconformity
b. Buyer’s Damages
i. Cover—doesn’t bar injured from another form of recovery
ii. Market recovery—difference between K price and market price at time buyer learned of the breach
c. Sellers Rights
 i. Cure—K time must not have come and gone
d. Sellers Damages
i. Resale goods—recover damages from lost K
1. Sale must be related; good faith
2. Give proper notice to buyer
ii. Loss volume—cannot mitigate because unlimited supply
V. Conditions
a. True (Express) Conditions—standard is perfection
i. Failure to perform=forfeiture
ii. Ambiguity—court makes it a duty
b. Conditions of satisfaction
i. Artistic/aesthetic—subjective and good faith
ii. Commercial—reasonableness (objective)
c. Constructive Condition—standard is substantial performance
i. Independent Covenants—duty to do something; must continue performance
ii. Dependent Covenant—implied condition; 1 party must perform first
iii. Mutual/Simultaneous covenant—same time; if 1 fails, then can relieve other of performance
d. Material breach vs. Substantial performance
i. Material—affects the essence of the K; look at good faith
e. Time is of the essence
i. If dates are listed, does not automatically make it
ii. Option K—YES
iii. Construction Ks—NO
iv. Penalty clause—NO
VI. Excuse—you cannot hinder a party’s performance and later claim they breached
VII. Warranties
a. Express
i. Affirmation, promise, description, sample that they will conform to promise
ii. Mere statement of opinion, “puffery,” doesn’t create warranty
iii. Intention is irrelevant
iv. Buyer is in a better position to know than seller (no good)
v. Warranty made after the deal is good—no extra consideration needed
b. Implied
i. Warranty of Merchantability
1. Fit for their ordinary purpose; and
2. Perform as ordinary purchaser would expect
a. Exclude: “merchantability”; obvious
ii. Warranty of Fitness (Particular Purpose)
1. Seller has reason to know of specific purpose of the goods; and
2. Buyer is relying on seller’s judgment
a. Exclude: writing & obvious
iii. Excluding
1. “as is”
2. Course of dealing or usage of trade
VIII. Anticipatory Repudiation
a. Clearly and Unequivocally indicates they are not going to perform
b. Before the K performance (can sue anytime)
c. Can retract repudiation so long as other party has not materially changed their position
d. Demand assurances of adequate performance
e. Prospective inability to perform is not anticipatory repudiation
IX. Impossibility and FOP
a. Something unexpected occurs
b. Occurrence risk is not allocated (by K or custom)
c. Occurrence makes performance:
i. Impractical—something no longer exists (remember exceptions—fix, cost)
ii. Substantially more burdensome (FOP)
 1. Makes the K pointless
2. Would never have agreed to the terms b/c it just doesn’t make sense
X. TPB (Third Party Beneficiary)
a. Intended TPB—right to enforce
b. Incidental TPB—no right to enforce
c. Types: discharge an obligation or gift
d. Novation—someone had original K and substituted someone in (need unanimous agreement)
XI. Assignment/Delegation
a. Assign a right
b. Delegate a duty