Contracts Flash Cards Final Segment Formatted

Front 1

Plain Meaning Jurisdiction (PE)

Back 1

If a document is plain on its face, we would be loathe to submit PE to suggest an ambiguity that exists due to extrinsic evidence.

Front 2

Thomas Drayage Case (PG&E)

Back 2

(Drayage agreed to replace a cover on steam turbine, an there was an indemnity clause included, but after Drayage broke an engine turbine, he stated that the indemnity clause only applied to third parties.) Key words: steam turbine and indemnity clause. Introduced the Traynor approach. Traynor allows extrinsic evidence even though the K is clear bc it is important to allow understanding og each party’s intent.

Front 3

Traynor Approach:

Back 3

“The belief in plain meaning is a remnant of the primitive faith and inherent potency and inherent meaning of words.” Intention of the parties is important, and if the words mean something other than the intent of the K, then extrinsic evidence should allow the consideration of intent.

Front 4

Steps in determining if should consider extrinsic evidence under the Traynor Approach

Back 4

(1) Decide if agreement is integrated. (2) Is it hemmed in by plain meaning? (3) Entertain PE to determine if we are explaining or varying the terms of the K by considering extrinsic evidence.

Front 5

Trident Center

Back 5

(LA Law firm entered into loan agreement with Connecticut insurance which provided that Trident could not pre-pay.) Trayner considers evidence to directly contradict the non prepayment clause that Trident could prepay.

Front 6

Aide of Interpretation (considerations by the court in interpreting extrinsic evidence).

Back 6

Statutory analogy, Purpose Interpretation, Public Interest Concerns, Legal Maxims

Front 7

Statutory analogy

Back 7

PE is not like a statutory analogy bc legislators make intent clear, whereas each party will have a different story of their intent.

Front 8

Purpose Interpretation

Back 8

If a K states a condition, and it is clear that the condition has a purpose, and the purpose is met, then extrinsic evidence can vary the terms of the K. Ex. Clark v West (law professor who wrote a book drunk, and it was a good book)

Front 9

Public Interest Concerns

Back 9

The court will vary the terms of a K if enforcing the K has policy consequences. Ex. Westinghouse (Uranium prices would have driven them out of business if the K was enforced).

Front 10

Legal Maxims

Back 10

Legal maxims usually are an implication of a weak argument. One legal maxim is Contra Proferentem: Interpret Ks against the drafter.

Front 11

Hurst v WJ Lake

Back 11

(What is the crude fat content of horse meat? 40.5% or 50%?) The court can consider trade usage when K term is ambiguous, even I plain meaning states. C/C to Fragaliment v BNS (Huhn or baby chicken)

Front 12

Gap Fillers in PE

Back 12

Read in good faith and fair dealing. Dalton and Burger King.

Front 13

Dalton v ETS

Back 13

(Took a SAT with mono, and later the score went up 400 points.) Court went with Dalton bc the K allowed him to dispute ETS’ dismissal of his score, forced ETS to consider Dalton’s evidence. This was the result of reading in good faith.

Front 14

Burger King v. Weaver

Back 14

(Weaver has 2 Burger King Franchises in Great Falls Montana and gets upset when BK allows another franchise at the nearby military base.) Black Letter: Covenant of good faith and fair dealing exception applies here. The court denies Weaver relief bc B performed the K according to the terms of the K.

Front 15

Good faith will be read into a K unless:

Back 15

1) breaching party performed all of the points of the K. 2) Covenant would vary the terms of the K.

Front 16

Good faith interpretation varies how?

Back 16

By the context and the judge.

Front 17

Eastern Air Lines, Inc. v. Gulf Oil Corporation

Back 17

(Dispute between airline and fuel supplier over practice of fuel freighting.) Good faith includes good reasons, course of performance and industry practice. G should have factored in fuel freighting and price fluctuations.

Front 18

Market Street Associates v. Frey

Back 18

(Sneaky JC Penny lease clause for buy back at below market value.) Line between good faith and bad faith is fuzzy. Martinez did not agree with court holding bc the K was clear and JC did not deviate from the 4 corners regardless of intent.

Front 19

Dickey v. Philadelphia Minit-Man Corp.

Back 19

(Washing--high volume, low margin vs. Waxing--low volume, high margin) Issue over whether there was a duty continue washing bc K stated that there was, there was not as long as minimal amount was paid in accordance with the K.

Front 20

Feld v Henry S Levy

Back 20

(Agreed to sell bread crumbs on an output basis, at some point the sale of every single bread crumb was a loss, so the seller stopped the production of bread crumbs) Good faith requires performance even at a loss, but not to the point of driving you out of business.

Front 21

Bloor v Flagstaff

Back 21

(Brewery fails to use best efforts to continue sales on acquired label. Arrangement based on earn out). Consider extrinsic evidence to determine the requirement of Best Efforts. Court holds that since F kept from going out of business they are still required to used best efforts in selling B. C/C to Lady Duff Gordon

Front 22

Best Efforts Obligation

Back 22

Revolve around uncertain situations. Due diligence beyond good faith. Requires diligent effort to carry out an obligation. Ex. Agent for an actor.

Front 23

Sheets v. Teddy’s Frosted Foods

Back 23

(Employee fired for warning employer that they are violating food labeling statute.) Context at will arrangement, so how can there be a wrongful discharge? The court holds that contravention of public policy in firing even an at will employee is reason to read in bad faith.

Front 24

Nanakuli Paving v Shell

Back 24

(Nanakuli is a paving contractor, who bought from Shell, and sued Shell for not practicing price protection.) K does not include price protection—“posted price at delivery” but like in Drennan v. Star Paving there is reliance on fixed priced in placing a bid with a government entity. The course of performance by shell was the reason that N won.

Front 25

UCC 2-202

Back 25

Terms intended as the final expression (non-integrated) may not be contradicted by prior and contemporaneous agreements, but the terms can be explained or supplemented. This allows explanation of trade usage, course of dealing, course of performance or additional terms as long as there is no merger clause in the K. It throws out plain meaning rule, and points out that extrinsic evidence can be considered regardless as long as it does not contradict or “only partially contradicts” the 4 corners of the integrated agreement.