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When do we analyze parole evidence?
•When a K addressees a point but someone wants to contradict the terms.
•When a K leaves something out and someone wants to put something in.
Parole evidence --
As a general rule
The Parole Evidence Rule says that extrinsic evidence cannot be used to prove the terms of a contract and the intent of the parties must be determined from looking to the four corners of the document.

However, for the PER to apply, a contract must be complete.

As a general rule, we may use extrinsic evidence to determine whether a contract is a complete expression of the parties intent.
The first question concerns the timing of the evidence.
R. IF THE EXTRINSIC EVIDENCE SOUGHT TO BE USED CAME INTO EXISTENCE AFTER THE WRITING WAS MADE, THEN THE PER DOES NOT APPLY AND EXTRINSIC EVIDENCE MAY BE USED
The next step is to determine whether or not the contract contains a merger clause
R. A MERGER CLAUSE IN A CONTRACT RESTRICTS EXTRINSIC EVIDENCE BY STATING THAT THE PARTIES INTENDED THAT THE PARITES INTENDED THE CONTRACT TO BE THE FULL MANIFESTATION OF THEIR INTENT AND THAT NO OUTSIDE TERMS MAY BE ADDED OR IMPLIED IN THE CONTRACT. IF THERE IS A MERGER CLAUSE IN A CONTRACT THEN IT IS ENFORCED AND NO EXTRINSIC EVIDENCE WILL BE ALLOWED.
The next sub issue to be resolved is whether or not the parties intended for the contract to be the final expression of their intent or whether it appears from the
IF IT APPEARS THAT THEY INTENDED FURTHER NEGOTIATIONS, THEN THE PER DOES NOT APPLY AND EXTRINSIC EVIDENCE MAY BE USED.
V. If The parties intended the writing to be the final memorialization of the contract, then it must be determined whether or not the parties intended the writing to be a complete memorialization.
WILL LOOK TO THE INCLUSIVESNESS, SPECIFICITY AND FORMALITY OF THE CONTRACT.IF THE PARTIES INTENDED THE CONTRACT TO BE A COMPLETE MEMORIALIZATION, THEN THE PE RULE WILL BE ENFORCED IN ITS WEAKENED FORM THEREBY PREVENTING EXTRINSIC EVIDENCE TO BE USED TO CONTRADICT WHAT WAS IN THE CONTRACT BUT ALLOWING EXTRINSIC EVIDENCE TO BE USED TO SHOW THAT THE INTEND WAS CONSISTENT WITH WHAT WAS WRITTEN DOWN.
If the writing is not intended to be a complete manifestation of intent, then it must be determined if the writing is obviously incomplete.
IF, THE WRITING IS OBVIOUSLY INCOMPLETE, THEN WEAK FORM PER EVIDENCE RULE WILL ALSO BE ALLOWED.
The PER in its weakened form will also be allowed it would have been natural for the parties to have excluded the term.
A TERM WOULD BE NATURALLY EXCLUDED IF A RP WOULD HAVE NATURALLY EXCLUDED THE TERM FROM A CONTRACT.
Statute of Frauds
The statute of frauds prevents fraud by requiring certain contracts to be in writing and signed buy the party you are seeking to enforce a contract against.

Under the Texas statute of frauds, a writing will be required for the sale of land, the lease of real estate longer than a year, and any agreement that cannot be performed within a year of the making of the contract.

The UCC has its own SOF that will govern the sale of goods.
NON UCC SOF

The first question to be answered is whether or not the agreement between x and y will require a writing.
IN TEXAS, THE STATUTE OF FRAUDS REQUIRES A WRITING FOR

REAL ESTATE TRANSACTIONS,

FOR THE LEASE OF REAL ESTATE LONGER THAN A YEAR, AND

FOR CONTRACTS THAT CANNOT BE PERFORMED WITHIN A YEAR.
Next, it must be determined whether this napkin etc. _____ satisfies the requirements of a writing.
To satisfy the requirements of the SOF, a writing must
(1) reasonably ID the subject matter of the K,
(2) indicate that there is a deal or evidence that an offer of a K was made, and
(3) allow the parties to be reasonably certain as to the terms of the contract, meaning that parties must be able to ascertain when a breach has occurred and how to fashion a remedy.
Dont forget mini rules
R. A writing ID’s the subject matter of a K when you can tell what the contract is about.

R. A deal is made when the parties use words such as I agree or I offer

R. The terms of a contract are reasonably certain when parties can determine when a breach occurs and how to calculate a remedy.
UCC SOF
Because the transaction between X and Y is for the sale of goods, the SOF as determined under the UCC will apply.
R. Under the UCC a K for the sale of goods for $500 or more is not enforceable unless it is signed by the party you are trying to enforce the K against.
The next issue is whether or not X’s refusal to respond to the contract allows him to claim that he did not accept the terms of the contract.
R. Under the UCC, if between merchants a writing is sent and the party receiving has reason to know its contents but does not respond within 10 day, the writing serves as a valid contract.
Exceptions to the requirement of a writing may be made under the UCC.
R. Exceptions to the requirement of a writing under the UCC are made when
(1) the a merchant has indicated that he is specially manufacturing goods under the contract or have taken steps toward manufacturing the goods,
(2) a manufacturer who is seeking to get out of a K has admitted that a K was made, and
(3) in the case of part performance where goods or payments have been made by the party.
Under the UCC, a contract for the sale of goods must also be signed
R. Under the UCC, “signed” has a broad definition and includes email and electronic signatures.
Consideration

We must determine whether or not the K between X and Y will be enforceable.
R. A contract is an enforceable promise or promises.

A promise is enforceable when it is supported by consideration.

A return promise or performance is consideration when it is bargained for.

A return promise or performance is bargained for when if is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise, this in known as inducement.
Consideration Analysis
A. Here we are trying to enforce the promise that X will do this _______.
B. Y claims that the consideration they gave for this promise is ________.
C. A return promise or performance is consideration when it is bargained for. A return promise or performance is bargained for when if is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise, this in known as inducemenT.
i. Here, X made his promise to do ____ specifically to get ______ from Y.
ii. Y gave ______(the alleged consideration) in exchange for the ______ (promise we are trying to enforce).
S. This contract is enforceable.
Special Rules of Consideration

Past consideration is no consideration.
Past consideration is no consideration. but come to this conclusion in the bargained for analysis.
R. Moral obligations are no consideration, except in Alabama under the Webb exception
The Webb exception in jurisdictions like alabama says that moral consideration is consideration if:
C. A substantial and material benefit has been conferred on the promisor (not property, but a physical benefit).
D. the benefit went directly to the promisor
E. and if physical injury has been sustained by the promisor.
a seal is not a substitute for consideration,
a seal is not a substitute for consideration, however in some jurisdictions (mass) a contract will be enforceable even in the absence of consideration if it is under seal.
Nominal consideration is no consideration.
R. Normally courts will not consider the adequacy of consideration except when a person gives something of value in exchange for nothing in return. This is consideration in name only. Due to the inadequacy, the consideration could not have been bargained for and therefore the contract will be held invalid.
What if a party fails to deliver consideration?
R. a majority of courts hold that if consideration is not delivered, then no consideration has taken place and a contract will not be enforceable.
S. However in some jurisdictions, the failure to deliver consideration does not invalidate a contract because they consider the promise to pay the consideration a valid consideration.
lack of intent to be legally bound
R. in order for an intent not to be legally bound to be enforceable, the statement must be (1) clear and conspicuous and (2) if the company says they are not legally bound by the rules, but operates as if they are, the court will interpret them as being legally bound to those rules. A contract will be implied even if they say that the writing is not an intent to be legally bound.
Contract modification – Construction.
R. As a rule, a pre-existing legal duty is past consideration and a modified contract will not stand unless there has been new consideration in exchange for the new promise.
Contract modification – Construction.
However, a modified contract will not be subject to the PELD rule and the duty will be adequate consideration when :
(1) truly unanticipated circumstances arise,
(2) a burden on one party has increased,
(3) the increased burden or unanticipated circumstance was not in the contemplation of the parties in figuring the cost.
Promissory Estoppel
LOOK FOR CASES that are
• Intrafamilial – no intention of a bargain so no consideration
• Charitable – people who give money don’t intend to bargain
• Pension - instances where consideration was claimed but it failed.

WHEN FORMATION DANCE FAILS – PE can only be relied on in construction cases for this.
If it is found that there has been no consideration for a promise then you may ask if the promise may be enforced through the doctrine of promissory estoppel.
R. The doctrine of promissory estoppel says that even absent consideration a K will be enforced if: (1) the promisor has made a promise,
(2) the promisor has expected that the promise will induce reliance,
(3) the promisee relies on the promise and the reliance is substantial and reasonable and
(4) Injustice can only be avoided by enforcing the promise.
II. To use promissory estoppel as a substitute for consideration there must be a promise made
R. A promise must be clear and definite, rather than puffery or salesmanship.
To use EP the promisor must have reason to expect the promise to induce reliance.
R. A promisor will be seen to have reason to expect the promise to induce reliance when the reliance is exactly why the promisor made the promise.
To use EP as a sub for consideration, the promisee must have reasonably relied on the promise.
R. Reliance is reasonable when the reliance matches expectations. If expectations are stated in vague terms or are far too speculative, a promisee cannot reasonably rely on the promise.
V. The final element that must be met for the doctrine of promissory estoppel to be used in place of consideration is that injustice will not be avoided without the enforcement of the promise.
R. Injustice is determined by the court and is a balance of a number of factors including the harms of not enforcing, the motives for the breach etc.
PE as an independant cause of action
LOOK INTO WHITE OWL ELEMENTS
Courts will also use the promissory estoppel as a separate cause of action if they are not able to pinpoint a promise that has been made, but there has been substantial reliance on one party based on a series of communications by a party. In these situations, a goal is identified but a definte concrete promise or commitment cannot be identified.
If an independant cause of action is determined, then the person relying on the representations will be entitled to a remedy based on the change in position they are in as a result of relying on the representations. They may recover out of pocket expenses but not profits. The independant COA of promissory estoppel is more like a reliance cause of action.
Good Faith
I. Questions of good faith arise when determining whether or not an action that is not expressly forbidden, allowed or required under a K may take place.
Implied good faith
R. All contracts have an implied duty of good faith and fair dealing in performance of a K. The doctrine of good faith limits the distance that a party can stretch the interpretation of the terms of the contract. EX – a percentage of gross sales contract requires that parties use reasonable efforts to make a profit. Failure to do so is in bad faith.

S. Bad faith must be found, it cannot be implied.
Warranties
• warranties are both implied and express.
• The UCC implies two warranties in a sales of goods contract
o an implied warranty of merchantability and
o an implied warranty of fitness for a particular purpose.
Implied warranty of merchantability
R. If a seller is a merchant that deals in the particular goods in dispute it is implied that the goods will be of the quality that everyone in the industry expects them to be.
Implied warranty of fitness for a particular purpose.
R. A warranty for a particular purpose will not be implied in all situations. For the UCC to imply a warranty for a particular purpose,
(1) the seller must have reason to know of the buyers purpose,
(2) the seller must have reason to know that the buyer is relying on the seller’s skill or judgment in furnishing the goods and
(3) the buyer must in fact rely upon the seller’s skill or judgment.
Express Warranties
R. Express warranties in a contract for the sale of goods will be enforced. An express warranty is
(1) and affirmation of fact or promise that
(2) relates to the goods and
(3) becomes part of the basis for the bargain.

An affirmation of fact or promise is not an opinion, can be objectively verified, and are specific and definite.
after a warranty is breached
R. the basis of recovery for warranties is reliance. Once a buyer becomes aware that a warranty has been breached, he cannot rely on the warranty any longer. The representation by the buyer is negated after a certain point.
Disclaimer of Warranties
warranties implied under the UCC may be waived
(1)either expressly by language used in the trade such as “as is” or

(2) if the buyer fails to discover a defect that should have been discovered or

(3)if the buyer chooses not to inspect the product.

***disclaimers under the UCC may limit or modify liability otherwise implied by the code but do not defeat separate causes of action for unfair deceptive trade practices or practices under other supplemental bodies of law.
Difference between a promise and a condition
• The failure to meet a condition excuses the duty of the party whose duty arises after the condition is met. The failure of a condition essentially voids a contract.
• The failure to fulfill a promise is a breach of a duty but does not excuse the other party from fulfilling their duty unless it is a material breach. The duty of the party who did not break the promise does not extinguish, however they may have a claim for damages.
• A promisory condition
Condition precedet
If there is a condition precedent, there is no obligation on the other party until the condition is met. The effect of a failed condition is forfeiture.

Courts do not like forfeiture and therefore look unfavorably toward conditions.

Conditioning language must be absolutely clear, a court will not imply a condition.

words like “if” when provided that may be seen as creating a condition.
Waiver
R. A condition is waived if a party does something inconsistent with the condition and then seeks to enforce it.
A condition may also be waived if
S. A condition may also be waived if there is an express relinquishemnt of the right to enforce the condition but it must be deliberate and not by accident. acquiessence is not enough.
Excuse
R. In order for the court to allow an excuse for the breach of a condition the party at fault must
(1) have acted in good faith,
(2) made substantial improvements to the property,
(3) intended to meet the condition. There must also be
(4) substantial loss to the tenant and
(5)allowing the excuse must not prejudice or harm the party not at fault.
Constructive conditions
ways a court will attempt to avoid forfeiture
Order of performance –
R. A Court will imply the order of performance based on common sense. As a general rule, the performance that takes some time to complete is intended to be performed first.
reciprocal promises
S. Reciprocal promises usually occur in the context of the sale of goods. In order to trigger the obligation of the other party and therefore sue for breach a party must show that he had performed or was ready to perform his part of the contract.
Doctrine of substantial performance
R. The doctrine of substantial performance is a condition that a court may imply in order to trigger a return obligation. The focus is on what the non-breaching party didn’t get. A non-breaching party will be entitled to the doctrine of substantial performance if:
(1) the non-performance did not destroy the purpose of the contract,
(2) if the non-performance was not willfull, and
(3) if the cost of the non-performance is significantly smaller than the cost of the forfeiture.
substantial performance mini rules
something destroys the purpose of a contract when the purpose cannot be achieved due to the non-performace

a non-performance of a condition is willful when it is the intent of the non-performing party to intentionally go against the will of the other party.

The forfeiture must be more significant then the deviation due to the non-performance when the two are compared.
SP is still abreach
Substantial performance is still a breach so even though it doesn’t void the contract and triggers the other party’s obligation to pay, the non-breaching party will still be held liable for damages.
Anticipatory Repudiation
R. a party may cancel a contract if, before the time for performance arrives, the other party indicates that he does not intend to perform his obligations under the contract.

For a party to rely on the doctrine of anticipatory repudiation, there must be a definite and unequivocal manifestation of an intent not to perform.

a mere request for a change in terms or a request for cancellation of the contract is not in itself enough to constitute a repudiation.

An intent to breach if a condition is met will not be seen as a manifestation of an intent to breach.
AR under the UCC
R. Under the UCC, when either party repudiates the contract with respect to performance not yet due, and the loss will substantially impair the value of the contract the aggrieved party may suspend performance and :
(1) wait for a commercially reasonable time to declare AR or
(2) sue immediately for breach.

S. The UCC does not define repudiation, so the common law requirement that a repudiation be a definite and unequivocal manifestation of an intent not to perform
Retraction of AR under the UCC
However, the UCC also provides that a repudiating party may retract his repudiation up until the time the performance is due.
Insecurity and Assurances of Performance
R. When reasonable grounds for insecurity arise with respect to the performance of either party, the other may, in writing, demand adequate assurance of the performance due, and until he receives such assurance, may if commercially reasonable, suspend any performance for which he has not already received the agreed return.

If the other party does not respond with adequate assurances, it is adequate grounds for anticipatory repudiation, giving the agreived party the right to cancel the contract.
Reasonable grounds
R. there is no bright line test for what reasonable grounds are and the determination will be made on a case by case basis.
demand in writing
R. a party must demand assurances in writing in order for the request for assurancs to be valid.
suspension of performance
R. A party can suspend their performance until they receive adequate assurances from the other party.
If there is no response
R. a party may declare anticipatory repudiation if they have not received assurances after a reasonable time. Although there is no bright line as to what constitutes a reasonable time, court have interpreted a reasonable time as being no longer than 30 days.
Material Breach
R. I a breach constitutes a material failure of performance, the non-breaching party is discharged from all liability under the contract.
How is a material breach determined
S. A court will look to the essence of a contract to determine whether or not a breach goes to the substance or root of a contract. Factors the court will consider are:
(1) The extent to which the injured party will be deprived as to the benefit which he reasonably expected.
(2) The extent to which the injured party can be compensated for what they did not get,
(3) the extent of forfieture of the breaching party if it was determined there was a material breach,
(4) is there a cure, meaning can the breaching party perform if the breach is not seen as a material breach, and
(5) whether or not the breaching party acted in good faith.
The court will analyze the extent to which the breaching party was deprived.
R. In this analysis, the court will compare what was received with what was expected.
The court will consider the estent to which the injured party can be compensated for what they did not get.
R. In this analysis a court will ask whether or not monty damages will suffivce as a remedy to this breach or whether it is too difficult to put a price on what was lost by the non-breaching party.
the court will ask if a cure is available if the breach is not seen as material.
R. A cure is available if a breaching party is able to give the non-breaching party what they reasonably expected without declaring a material breach.
the court will look to whether or not the breaching party acted in good faith.
R. A breaching party acts in good faith when they try to fulfill their obligations under the contract, but are unable to do to an excuse and not because they are trying to take advantage of the non-breaching party or never inteded to fullfill the contract in the first place.
The difference between substantial performance and material breach
*** The difference between substantial performance and material breach is in what is sought. To require a substantial performance analysis the party suing must be trying to get paid or the performance from the other party, not trying to cancel the contract. in a material breach situation, the party is trying to cancel the contract and let the other guy loose.

The question in a substantial performance analusis is did the breaching party do enough to get paid. The question in a material breach is is this breach enough to get us a divorce.
Perfect Tender (rejection, acceptance, revocation)
R. The UCC has adopted the common law rule that a seller has a duty to make a perfect tender of the goods requested and any breach of the goods requested and any breach constitutes a material breach. Perfect tender is the delivery of goods that conform to what the seller requested. However, the UCC has procedures to mitigate the harshness of the perfect tender rule.
Rejection
R. The first of these is Rejection. Under the UCC a buyer may reject goods for any non-conformance, but
(1)the seller has an unconditional right to cure until the time the performance is due and
(2) if the seller reasonably believed the buyer would take the non-conforming goods he has a right to cure for a reasonable period of time after the time of performance. If the seller does not cure, then the buyer has a right to reject the contract.
a reasonable amount of time
R. A seller will be given a reasonable amount of time to cure s defect. a reasonable amount of time will be determined by the circumstances.
Acceptance
R. Acceptance occurs when a buyer has acceptance of the goods and
(1) gives notice of intent to accept,
(2) fails to give notice of acceptance or rejection in a reasonable time, or
(3) acts inconsistent with the seller’s ownership of the goods. After acceptance, the buyer loses the ability to reject, but he may still revoke the acceptance if the non-conformity substantially impairs the value of the goods to him.
Revocation
R. A buyer may revoke his acceptance of goods if a non-conformity substantially impairs the value of the goods to him and either
(1) the buyer accepted the goods with the understanding that the seller would fix the defects OR
(2) acceptance was induced by difficulty of discovery the non-conformity or due to the seller’s assurances that the goods would conform.
Defenses

Capacity
R. Contracts by a mentally incompetent person may be voided. a person incurs a voidable contractual duty by entering into a transaction if, by reason of mental illness or defect
(1) he is unable to understand the nature or consequences of the transaction OR
(2) he is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition.
Infancy
R. As a general rule an infant does not have the capacity to contract and all contracts entered into with an infant are voidable. There is however an acception for necessaries.

An infant will be liable for contracts for necessaries. A necessary is
(1) something an infant actually needs and
(2) is obligated to provide for themselves. If a parent is able to provide the service or good for the infant than it is not a necessary.
what if i turn 18?
When minors turn the age of majority, they can either disaffirm or affirm the contract and not disaffirming within a reasonable time is affirming.

Minors can disaffirm their own consent and that of their parents. However, some statutes can abrogate this right.
Fraudulent Misrepresentation
R. A misrepresentation is a statement not in accord with the facts.

A fraudulent misrepresentation occurs when the maker of the statement
(1)knows or believes that the statement is not in accord with the facts,
(2) does not have confidence in the assertion he makes, OR
(3) knows that he does not have the basis for the assertion that he states or implies.
Material misrepresentation
Even if the misrepresentation isn’t fraudulent it still may be considered a material misrepresentation
when is a misrepresentation material?
R. a misrepresentation is material if
(1)it would be likely to induce a reasonable person (objective) to manifest his assent, OR if
(2)the maker knows that it would be likely to induce the recipient to do so. (subjective – taking advantage) AND
(3)the misrepresentation actually induced assent or was a basis for the assent.
was the statement an opinion or a fact that became a material or fraudulent misrepresentation?
R. Opinions generally do not rise to the level or misrepresentation because they are not facts but they can be the basis of a misrepresentation when the person stating the opinion does not really believe it or when the relationship of the parties are not at arms length (one has superior knowledge, a fiduciary relationship, artifce or trick ).
Duress
In cases of contract modification usually
was bob’s assent made under duress?
R. Duress is when one, because of the acts of another, is induced to make a contract or perform some act under circumstances that deprive him of free will. To qualify for duress, there must be
(1) a wrongful threat that
(2) deprives someone of free will and
(3) induces them to give up a right. The party under duress must missing element
(4) have no alternative way to get goods within a reasonable amount of time and
(5) normal money damages must not be enough to compensate the party.
put up a fight damn you!
Rule: if a party is going to claim duress then they must have put up a fight with contract modification.

Rule: Normally you must bring a duress suit quickly. If yo udo not you must have some excuse like you were afraid that if you threatened suit the other party would stop performing.

Rule:If you are going to claim duress you must go kicking and screaming** look for a hypo where there is a contract mod and then they have to reluctantly agree**
unconscionability
S. Rule: Unconscionability occurs when a party with superior bargaining power imposes terms on anther party that have no reasonable commercial justification and the terms are so-one-sided that it is unlikely the other party willingly consented to those terms.
Unconsionability factors
T. Factors a court will consider when looking to see if a contract is unconscionable are: (1) denial of remedie, (2) disproportionate penalties, (3) One-sided terms that are hidden or non-discernable (taking into account education and sophistication of the party), and (4) reasonable alternatives (not the same alternative, terms must be different).

if unconsionablility comes up in a contract modification scenario, the test is good faith.
Mistake of fact
R. where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of mistake.
when does mmof void a K?
S. For a mutual mistake of fact to void a contract there must be (1) a mutual mistake (2) that goes to a basic assumption on which the contract was based that (3) materially affects the value of performance and (4) the adversely affected party does not bear the burden of the risk.
when does a party bear the risk of mistake?
T. There are 3 ways you can bear the risk of the mistake
(1) if the reisk was allocated to you in the contract,
(2) you know that you don’t know (in cases of guess or estimation) and
(3) the risk is allocated to him b the court in equity.
Unilateral mistake
R. Generally, a mistake made by only one party does not get you out of a contract, but if one party knows of another’s mistake and in bad faith goes along with the contract to take advantage of the other party then a court may award a restitution type damage.

However, there is no duty to communicate extrinsic evidence that might influence the price

T. There is no duty to inform the other party of information you have that would benefit you but a party cannot mislead or perpetuate a mistaken belief the other has. This would be misrepresentation of fraud.
Unilateral mistake
Rule: Where (1)a mistake of one party at the time the contract was made (2) as to a basic assumption on which he made the contract (3) has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he (4)does not bear the risk of the mistake and (5) the other party had reason to know of the mistake at the time of the conract.