George Mason School of Law

1. George Mason School of Law Contracts II Terms This file may be downloaded only by registered students in my class, and may not be shared by them F.H. Buckley fbuckley@gmu.edu

2. Next day • Up to Scott 644 • (Note that I will add Scott 644-59 on modification and waiver)

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

4. Identifying the Terms and Interpreting them • Identifying: what are the terms • Interpreting: what do they mean?

5. Oral statements and the Parol Evidence Rule • In either case, do we look outside the written contract? • Oral statements • Course of dealings • Trade customs • Implied terms

6. Here’s a thought… • Why not just ignore written contracts? • The letter enslaves and the spirit makes free.

7. 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

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

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

10. What happens where there is a writing? • First question: Is this a binding contract?

11. What happens where there is a writing? • Unsigned terms • Birmingham TV v. Waterworks • Restatement 211(1), Illustration 1

12. What happens where there is a writing? • Is a signature dispositive? Lady Gaga signs an autograph

13. What happens where there is a writing? • Is a signature dispositive? • Restatement 211(1), Illus. 3

14. What happens where there is a writing? • Is a signature dispositive? • Restatement 211(1), Illus. 3 • Recall Merit Music at 429 • “I imagined it was a note.”

15. What happens where there is a writing? • First question: Is this part of a binding contract? • Non est factum: • Restatement §§ 163, Illustration 2 15

16. Identifying the terms • So assume we have a contract—but what are its terms? 16

17. Identifying the terms • What is an integrated agreement • Restatement 209(1) • The presumption in 209(3) 17

18. Identifying the terms • What then is an UNintegrated agreement? 18

19. Identifying the terms • What is the difference between a completely and a partially integrated agreement • Restatement 210 19

20. Can we look behind a signed written contract for the terms of the contract? • That’s all new (and confusing) • The traditional Parol Evidence Rule

21. Can we look behind a signed written contract for the terms of the contract? • That’s all new (and confusing) • 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

22. Can we look behind a signed written contract for the terms of the contract? • That’s all new (and confusing) • 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 • The “four corners” rule

23. 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 • Completely integrated writings: Restatement § 213(1)(2)

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. • Problems?

25. 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? • “Two entirely distinct contracts … may be made at the same time, and will be distinct legally.” Williston at 546

26. Limits to the Parol Evidence Rule • “Two entirely distinct contracts … may be made at the same time, and will be distinct legally.” Williston at 546 • Collateral Contracts

27. Limits to the Parol Evidence Rule • “Two entirely distinct contracts … may be made at the same time, and will be distinct legally.” Williston at 546 • Distingish Collateral Contracts from Partially Integrated Contracts

28. Collateral Agreements • The test in Mitchill v. Lath 546 Ice House

29. Collateral Agreements How is this like my example of the painting? 29

30. Collateral Agreements What is the test of a collateral agreement? 30

31. Collateral Agreements • The test in Mitchill v. Lath • In form a collateral agreement 31

32. Collateral Agreements • The test in Mitchill v. Lath • In form a collateral agreement • Can’t contradict the written agreement 32

33. Collateral Agreements • The test in Mitchill v. Lath • In form a collateral agreement • Can’t contradict the written agreement • The collateral agreement would not ordinarily be embodied in the main agreement 33

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

35. Masterson v. Sine Justice Louis H. Burke Chief Justice Roger Traynor

36. Masterson What was the contract? 40

37. Masterson Sale Option to repurchase Dallas Medora 41

38. Masterson Sale Option to repurchase Dallas Medora What was the oral modification? 42

39. Masterson • What was the oral modification? • Dallas reserves an option to repurchase which does not convey to his assigns (i.e., trustee in bankruptcy) 43

40. Masterson • What happens if an agreement is fully integrated per Traynor? 44

41. Masterson • What happens if an agreement is fully integrated per Traynor? • Parol evidence can’t be admitted to add to or vary terms 45

42. Masterson How to tell if a writing is completely or partially integrated per Traynor? 46

43. Masterson • How to tell if a writing is completely or partially integrated per Traynor? • “Any such collateral agreement must itself be examined…”? 47

44. Masterson • How to tell if a writing is completely or partially integrated per Traynor? • So can a court ever restrict itself to the writing? 48

45. 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”??? 49

46. Masterson • Different standards for admitting oral statements: 552 • Admit if the agreement would “naturally be made as a separate agreement”: McCormick • Admit unless the terms would “certainly have been included in the agreement”: UCC 2-202 50

47. Masterson • What about the oral evidence in this case? • Admit if the agreement would “naturally be made as a separate agreement”: McCormick • Admit unless the terms would “certainly have been included in the agreement”: UCC 2-202 51

48. Masterson What does it means to say that the Parol Evidence Rule is a rule of substantive law and not of evidence? P. 554 52

49. Masterson • Are Burke’s charges correct? • The change contradicts a term which would ordinarily be supplied by operation of law. 53

50. How does the Restatement handle this? • Which way does the Restatement come down? Traynor or Burke? • Cf. § 210(3) comment