George Mason School of Law

George Mason School of Law Contracts II Terms F.H. Buckley fbuckley@gmu.edu

So now we have an enforceable contractBut what is its content?

Identifying the Terms and Interpreting them • Identifying: what are the terms • Interpreting: what do they mean? • Conditions and Warranties • Mistake

Identifying the Terms and Interpreting them • In any event, do we look outside a written contract? • Oral statements • Course of dealings • Trade customs

Some jargon • What is Parol Evidence? • The Parol Evidence Rule as a legal presumption

Some jargon • What is Parol Evidence? • The Parol Evidence Rule as a legal presumption • Merger Clauses

Some jargon • What is Parol Evidence? • The Parol Evidence Rule as a legal presumption • Merger Clauses • Textualism

Some jargon • What is Parol Evidence? • The Parol Evidence Rule as a legal presumption • Merger Clauses • Textualism • Four Corners rule

Some jargon • Textualism and Contextualism

What would we lose if we banned written contracts? • Certainty as to terms • Recall the rationale for the Statute of Frauds in McIntosh p. 518

What would we lose if we banned written contracts? • Certainty as to terms • Adjudication and Litigation Costs

What would we lose if we banned written contracts? • Certainty as to terms • Adjudication and Litigation Costs • Agency Costs of Seller’s Agents

What happens where there is a writing? • First question: Is this a binding contract? Lady Gaga signs an autograph

What happens where there is a writing? • First question: Is this part of a binding contract? • Recall Merit Music at 429 • “I imagined it was a note.”

What happens where there is a writing? • First question: Is this part of a binding contract? • Signed writings: Restatement § 211(a)

What happens where there is a writing? • First question: Is this part of a binding contract? • Non est factum: • Restatement § 163, Illustration 2 • Restatement §§ 211(c), 214(d) 16

What happens where there is a writing? • First question: Is this part of a binding contract? • Birmingham TV p. 431

Can we look behind a signed written contract for the terms of the contract? • Integrated Agreements: • Restatement § 209(1), comment a

Can we look behind a signed written contract for the terms of the contract? • Integrated Agreements: • Completely and Partially Integrated Writings: Restatement § 210

Can we look behind a signed written contract for the terms of the contract? • Integrated Agreements: • Completely and Partially Integrated Writings: Restatement § 210 • Ch 210(3): what happened to the parol evidence rule?

Can we look behind a signed written contract for the terms of the contract? • The traditional Parol Evidence Rule • Burke at 554 in Masterson • Where the writing is integrated, parol evidence is not admitted to “add to, vary or contradict” the writing

Can we look behind a signed written contract for the terms of the contract? • The traditional Parol Evidence Rule • Burke at 554 in Masterson • Where the writing is integrated, parol evidence is not admitted to “add to, vary or contradict” the writing • Fully integrated writings: Restatement § 213(2)

Limits to the Parol Evidence Rule • Additional terms supplied by statute or courts • Omitted Essential Terms • Collateral Agreements

Limits to the Parol Evidence Rule • Additional terms supplied by statute or courts • Good title: UCC § 2-312 • Merchantability: UCC § 2-314 • Fitness for purpose: UCC § 2-315

Limits to the Parol Evidence Rule • Omitted essential terms: Restatement § 204 • The one-year term on employment in McIntosh at 516

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 B sells a painting to A for $400 in an oral agreement. Problems?

Limits to the Parol Evidence Rule: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 546

Collateral Contracts • The test in Mitchill v. Lath Ice House

Collateral Contracts • 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 written agreement 29

Integration: Masterson v. Sine Jones v. Ahmanson Escola v. Coca-Cola Pacific Gas infra Perez v. Sharp Chief Justice Roger Traynor

Integration: Masterson v. Sine Justice Louis H. Burke Chief Justice Roger Traynor

Integration: Masterson v. Sine What was the deal? 35

Integration: Masterson v. Sine Dallas and Rebecca Masterson ranch Medora and Lu Sine (sister and brother-in-law) What was the deal? 36

Integration: Masterson v. Sine Dallas and Rebecca Masterson Option to repurchase Medora and Lu Sine (sister and brother-in-law) What was the deal? 37

Integration: Masterson v. Sine What rights does a trustee in bankruptcy have? 38

Integration: Masterson v. Sine • What rights does a trustee in bankruptcy have? • The commencement of a case … creates an estate. Such estate is comprised of all the following property: • all legal or equitable interests of the debtor in property as of the commencement of the case. 39

Integration: Masterson v. Sine What was the alleged oral modification? 41

Integration: Masterson v. Sine • What was the oral modification? • Dallas reserves an option to repurchase which does not convey to his assigns 42

Integration: Masterson v. Sine • What was the oral modification? • What happens if an agreement is fully integrated per Traynor? 43

Integration: Masterson v. Sine • What was the oral modification? • What happens if an agreement is partly integrated per Traynor? 44

Integration: Masterson v. Sine • What was the oral modification? • How to tell if a writing is completely or partially integrated per Traynor? 45

Integration: Masterson v. Sine • 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…”?? 46

Integration: Masterson v. Sine • 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…”??? 47

Integration: Masterson v. Sine • What was the oral modification? • How to tell if a writing is completely or partially integrated per Traynor? • Does that mean that contextualism is imposed in every case? 48

Integration: Masterson v. Sine What is the policy argument for contextualism? 49

Integration: Masterson v. Sine • What is the policy argument for contextualism? • “the party urging the spoken as against the written word is most often the economic underdog” 50

Integration: Masterson v. Sine • What is the policy argument for contextualism? • “the party urging the spoken as against the written word is most often the economic underdog” • Is that the case here? 51

Integration: Masterson v. Sine • What is the policy argument for textualism? 52

Integration: Masterson v. Sine • What is the policy argument for textualism? • Written evidence as more accurate than memory 53

Integration: Masterson v. Sine • What is the policy argument for textualism? • Written evidence as more accurate than memory • Juror bias 54

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