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George Mason School of Law. Contracts II Terms F.H. Buckley fbuckley@gmu.edu. So now we have an enforceable contract But what is its content?. Sir William Blackstone. First, Some Legal History. Sir William Blackstone.

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george mason school of law
George Mason School of Law

Contracts II

Terms

F.H. Buckley

fbuckley@gmu.edu

sir william blackstone
Sir William Blackstone

First, Some Legal History

sir william blackstone4
Sir William Blackstone
  • It is better that 10 guilty men should go free than that one innocent man suffer.
  • The public good is in nothing more essentially interested, than in the protection of every individual's private rights.
  • Free men have arms; slaves do not.
  • Herein indeed consists the excellence of the English government, that all parts of it form a mutual check upon each other.
  • Every wanton and causeless restraint of the will of the subject, whether practiced by a monarch, a nobility, or a popular assembly, is a degree of tyranny.
sir william blackstone5
Sir William Blackstone

Maybe I should take up this legal thing…

Henry Fonda in Ford’s Young Mr. Lincoln

a trio of english judges sir george jessell m r
A Trio of English JudgesSir George Jessell M.R.

Pender v. Lushington

In re Hallett’s Estate

Printing v. Sampson

a trio of english judges lord blackburn
A Trio of English Judges Lord Blackburn

Tweedle v. Atkinson

Taylor v. Caldwell

Hughes v. Metropolitan Ry

a trio of english judges bramwell l j
A Trio of English JudgesBramwell L.J.

Bank of England v. Vagliano

Rylands v. Fletcher

arthur corbin
Arthur Corbin

1874-1967

identifying the terms and interpreting them
Identifying the Terms and Interpreting them
  • In either case, do we look outside the written contract?
    • Oral statements
    • Course of dealings
    • Trade customs
here s a thought
Here’s a thought…
  • Why not just ban written contracts?
    • The letter enslaves and the spirit makes free.
what would we lose if we banned written contracts
What would we lose if we banned written contracts?
  • Certainty as to terms
    • Recall McIntosh p. 518
what would we lose if we banned written contracts17
What would we lose if we banned written contracts?
  • Certainty as to terms
  • Agency Costs of Seller’s Agents
what would we lose if we banned written contracts18
What would we lose if we banned written contracts?
  • Certainty as to terms
  • Agency Costs of Seller’s Agents
  • Adjudication and Litigation Costs
what happens where there is a writing
What happens where there is a writing?
  • First question: Is this a binding contract?
    • As opposed to yesterday’s shopping list…
    • Or a memo about preliminary negotiations
    • Or an offer
what happens where there is a writing20
What happens where there is a writing?
  • First question: Is this part of a binding contract?
    • Qu. Merit Music at 429
      • “I imagined it was a note.”
        • What if that was Merit Music had told him?
what happens where there is a writing21
What happens where there is a writing?
  • First question: Is this part of a binding contract?
    • Qu. Merit Music at 429
      • “I imagined it was a note.”
      • Non est factum:
        • Restatement §§ 163, 211(c), 214(d)

21

slide22

What happens where

there is a writing?

  • First question: Is this part of a binding contract?
    • Birmingham TV p. 431
      • What if the writing on the back had been brought to the bailor’s attention?
what happens where there is a writing23
What happens where there is a writing?
  • First question: Is this part of a binding contract?
    • Birmingham TV p. 431
      • What if it had been signed?
        • Restatement §§ 211(a)
can we look behind a signed written contract for the terms of the contract
Can we look behind a signed written contract for the terms of the contract?
  • Integrated Agreements
    • Restatement § 209(1)
      • Does this exclude oral evidence?
        • See Comment a
can we look behind a signed written contract for the terms of the contract25
Can we look behind a signed written contract for the terms of the contract?
  • Integrated Agreements
  • Additional terms supplied by courts
      • Fair dealing: Restatement § 205
      • Good title: UCC § 2-312
      • Merchantability: UCC § 2-314
      • Fitness for purpose: UCC § 2-315
can we look behind a signed written contract for the terms of the contract26
Can we look behind a signed written contract for the terms of the contract?
  • Integrated Agreements
    • Supplying omitted essential terms: Restatement § 204
      • The one-year term on employment in McIntosh
can we look behind a signed written contract for the terms of the contract27
Can we look behind a signed written contract for the terms of the contract?
  • Integrated Agreements
    • Supplying omitted essential terms: Restatement § 204
        • Gap-filling as a method of reducing transaction costs
can we look behind a signed written contract for the terms of the contract28
Can we look behind a signed written contract for the terms of the contract?
  • The Parol Evidence Rule
    • 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 in an oral agreement. Problems?
can we look behind a signed written contract for the terms of the contract29
Can we look behind a signed written contract for the terms of the contract?
  • The Parol Evidence Rule
    • 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 in an oral agreement. Problems?
    • Williston at 546 on collateral contracts
      • How to tell them apart?

29

suppose we have a signed written contract can we ever look beyond it
Suppose we have a signed written contractCan we ever look beyond it?
  • The test in Mitchill v. Lath

Ice House

parol evidence rule
Parol Evidence Rule

*Cannot “add to, vary or contradict”: Burke at 554

  • The test in Mitchill v. Lath
    • In form a collateral agreement
    • Can’t contradict the written agreement*
    • One that would not ordinarily be embodied in the writing

31

masterson v sine
Masterson v. Sine

Jones v. Ahmanson

Escola v. Coca-Cola

Pacific Gas infra

Perez v. Sharp

Chief Justice Roger Traynor

masterson v sine33
Masterson v. Sine

Justice Louis H. Burke

Chief Justice Roger Traynor

masterson
Masterson

What was the oral modification?

37

masterson35
Masterson
  • What was the oral modification?
    • Dallas reserves an option to repurchase which does not convey to his assigns

38

masterson36
Masterson
  • What was the oral modification?
    • What happens if an agreement is fully integrated per Traynor?

39

masterson37
Masterson
  • What was the oral modification?
    • What happens if an agreement is partly integrated per Traynor?

40

masterson38
Masterson
  • What was the oral modification?
    • How to tell if a writing is completely or partially integrated per Traynor?

41

masterson39
Masterson
  • What was the oral modification?
    • How to tell if a writing is completely or partially integrated per Traynor?
      • “Any such collateral agreement must itself be examined…”??

42

masterson40
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…”???

43

masterson41
Masterson
  • Traynor on Parol Evidence
    • Would the reference excluding assigns “naturally be made as a separate agreement”?

44

masterson42
Masterson
  • Traynor on Parol Evidence
    • Would the reference excluding assigns “naturally be made as a separate agreement”?
    • Is this about identifying the terms of the agreement or interpreting them?

45

masterson43
Masterson
  • Are Burke’s charges correct?
    • The change contradicts a term which would ordinarily be supplied by operation of law.

46

how does the restatement handle this
How does the Restatement handle this?
  • Which way does the Restatement come down? Traynor or Andrews?
    • Cf. §§ 209(2), 210(3) comments
how does the restatement handle this45
How does the Restatement handle this?
  • Which way does the Restatement come down? Traynor or Andrews?
    • Cf. § 214
how does the restatement handle this46
How does the Restatement handle this?
  • Which way does the Restatement come down? Traynor or Andrews?
    • Cf. § 215
how does the restatement handle this47
How does the Restatement handle this?
  • Which way does the Restatement come down? Traynor or Andrews?
    • Cf. § 216
      • Separate consideration: Illustration 3
      • Terms omitted naturally: Illustration 7
george mason school of law48
George Mason School of Law

Contracts II

Terms

F.H. Buckley

fbuckley@gmu.edu

the content of the contract
The Content of the Contract
  • When can one look behind a writing for evidence of the terms of a contract?
    • Traditionally Parol Evidence could not “add to, vary or contradict” a writing
the content of the contract50
The Content of the Contract
  • When can one look behind a writing for evidence of the terms of a contract?
    • Traditionally Parol Evidence could not “add to, vary or contradict” a writing
      • Doesn’t include gap-filling terms, e.g. UCC warranties
the content of the contract51
The Content of the Contract
  • When can one look behind a writing for evidence of the terms of a contract?
    • Traditionally Parol Evidence could not “add to, vary or contradict” a writing
      • Non est factum: Exception for fraud, duress, mistake. Restatement §§ 163, 211(c), 214(d)
the content of the contract52
The Content of the Contract
  • When can one look behind a writing for evidence of the terms of a contract?
    • Traditionally Parol Evidence could not “add to, vary or contradict” a writing
      • “Consistent additional terms”: Restatement § 216(2)
how does ucc 2 202 handle this54
How does UCC 2-202 handle this?
  • The writing may be explained or supplemented with consistent additional terms unless the writing was intended as complete and exclusive
how does ucc 2 202 handle this55
How does UCC 2-202 handle this?
  • Comment 3: would the oral term “certainly” have been included in the writing?
    • How does this compare with restatement § 216(2)(b): would the oral term “naturally” be omitted?
how does ucc 2 202 handle this56
How does UCC 2-202 handle this?
  • Comment 3: would the oral term “certainly” have been included in the writing?
    • How does this compare with restatement § 216(2)(b): would the oral term “naturally” be omitted?
      • Which language is narrower?
how does ucc 2 202 handle this57
How does UCC 2-202 handle this?
  • Hunt Foods
    • What was the allegedly omitted term?
how does ucc 2 202 handle this58
How does UCC 2-202 handle this?
  • Hunt Foods
    • What was the allegedly omitted term?
      • Why do you think Hunt refused to include the term in the writing?
how does ucc 2 202 handle this59
How does UCC 2-202 handle this?
  • Hunt Foods
    • What was the allegedly omitted term?
      • Why do you think Hunt refused to include the term in the writing?
        • Were these sophisticated parties?
how does ucc 2 202 handle this60
How does UCC 2-202 handle this?
  • Hunt Foods
    • What was the allegedly omitted term?
      • “It is not sufficient that the existence of the condition is implausible. It must be impossible.”
how does ucc 2 202 handle this61
How does UCC 2-202 handle this?
  • Snyder
    • What was the alleged omitted term?
how does ucc 2 202 handle this62
How does UCC 2-202 handle this?
  • Snyder
    • Is a cancellation clause inconsistent with the written contract?
      • Why might Greenbaum have wanted to exclude unilateral exit rights?

65

merger clauses
Merger Clauses

Traynor at 551

66

merger clauses64
Merger Clauses
  • Danann at 418
    • How was the clause different?
    • And what was special about the omitted testimony?

67

merger clauses uaw
Merger Clauses: UAW

Doral Resort and Country Club, Miami

merger clauses uaw67
Merger Clauses: UAW
  • Roush’s evidence
merger clauses uaw68
Merger Clauses: UAW
  • Can you think of something the UAW could have done to satisfy its concerns?
merger clauses uaw69
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
merger clauses uaw70
Merger Clauses: UAW
  • Williston and Corbin on merger clauses
  • Should freedom of contract govern?
    • Can the parties bargain around exceptions to the Parol Evidence Rule?
      • Markman’s specter of “super-merger clauses”
merger clauses uaw71
Merger Clauses: UAW
  • Williston and Corbin on merger clauses
    • Do they end up in the same place?
merger clauses uaw72
Merger Clauses: UAW
  • Williston and Corbin on merger clauses
    • Do they end up in the same place?
      • Dueling quotes from Corbin
        • Pp. 565, 566, 571, 572, 573
merger clauses uaw73
Merger Clauses: UAW
  • What was the allegation of fraud?
merger clauses uaw74
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?
merger clauses uaw75
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?
merger clauses uaw76
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?
      • Was there an assertion that CMC or Roush knew that the new owners would fire all the staff. Did she know she was about to be fired?
merger clauses uaw77
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?
      • Was there an assertion that CMC or Roush knew that the new owners would fire all the staff. Did she know she was about to be fired?
      • And if, per impossibilia, she did? Restatement § 161
successor liability
Successor Liability
  • A contracts with noted artist B to paint a picture for $10,000. B delivers the picture, but is not paid.
  • A sells the picture to C, without telling him that B has not been paid.
  • Can B sue C for the purchase price?
successor liability79
Successor Liability
  • A contracts with noted artist B to paint a picture for $10,000. B delivers the picture, but is not paid. A sells the picture to C, without telling him that B has not been paid. Can B sue C for the purchase price?
    • UCC § 2-403(1) A purchaser of goods acquires all title which his transferor had.
successor liability80
Successor Liability
  • A contracts with noted artist B to paint a picture for $10,000. B delivers the picture, but is not paid. A sells the picture to C, without telling him that B has not been paid. Can B sue C for the purchase price?
    • So did A acquire title from B?
successor liability81
Successor Liability
  • A contracts with noted artist B to paint a picture for $10,000. B delivers the picture, but is not paid. A sells the picture to C, without telling him that B has not been paid. Can B sue C for the purchase price?
    • UCC § 2-401(2)
successor liability82
Successor Liability
  • A Corp. merges with B Corp. The new corporation is called “B Corp.”
  • C had a claim against A Corp.
  • Can C bring this claim against B Corp.?
successor liability83
Successor Liability
  • A Corp. sells all its assets to B Corp.
  • C had a claim against A Corp.
  • Can C bring this claim against B Corp.?
successor liability84
Successor Liability
  • A Corp. sells all its assets to B Corp. C had a claim against A Corp. Can C bring this claim against B Corp.?
    • The De Facto Merger Doctrine
successor liability85
Successor Liability
  • A Corp. sells all its assets to B Corp. C had a claim against A Corp. Can C bring this claim against B Corp.?
    • The De Facto Merger Doctrine
    • Suppose you are counsel for B Corp. How do you react to the prospect of such liability before the asset sale?
successor liability86
Successor Liability
  • A Corp. sells all its assets to B Corp. C had a claim against A Corp. Can C bring this claim against B Corp.?
    • But is there an assertion of a de facto merger or successor corporation liability here?
slide87
UAW
  • On Holbrook’s analysis, what does a merger clause do?
slide88
UAW
  • On Holbrook’s analysis, what does a merger clause do?
  • What sense do you make of restatement § 216, cmt e
slide89
UAW
  • On Holbrook’s analysis, what does a merger clause do?
  • Seibel at 577
slide90
UAW
  • How would Markman have decided Hachmeister at p. 572?
ucc 2 316
UCC 2-316
  • What does this do to merger clauses?
george mason school of law92
George Mason School of Law

Contracts II

Interpretation

F.H. Buckley

fbuckley@gmu.edu

95