Contracts - Interpretation
Terms
undefined, object
copy deck
- What is the rule for various degrees of integration of parol evidence?
-
Not an Integration: can Explain the writing.
Partial Integration: can Explain and Supplement the writing.
Complete Integration: can Explain, Supplement, and Contradict the writing. - What are the two questions to be asked in order to classify agreements by the admissability of Parol Evidence?
-
First, is the writing an integration? It's an integration if it's FINAL.
If so, is the writing a complete or partial integration? There are four tests used to answer this question. - What are the tests for determining if a writing is a complete or partial integration? What governs?
-
Conservative Tests:
Wigmore: Writing is a complete integration if the PE "deals at all" with the subject matter of the writing.
Williston (MAJORITY): Writing is a complete integration if the PE "normally and naturally" would have been included in the writing.
Liberal Tests:
UCC 2-202 (MAJORITY, for goods): Writing is a complete integration only if reasonable parties would "certainly" have included the PE in the writing.
Corbin: Parties intended to include the subject of the PE. Court is given discretion to consider all evidence "logically relevant." - What are the policy justifications for liberal and conservative tests for judging whether a writing is a complete integration?
-
Liberal: Honor the intention of the parties.
Conservative: Preserve the integrity of the writing. - What is the significance of a merger clause to a writing?
- They are so common that they are not dispositive w.r.t. excluding Parol Evidence. The absence of a merger clauses, however, is strong evidence that the writing is not a complete integration, or perhaps not an integration at all.
-
What is the definition of an Integration?
(the terms illuminate the "exceptions" to the PE rule.) -
A writing embodying a single, valid, enforceable contract and thereby superseding prior and contemporaneous parol terms.
Collateral Agreement
Consistent Oral Conditions Precedent
Proof of facs triggering Enforceability Doctrine
Subsequent Oral Modification - What are the requirements for an Incorporation by Reference?
- "A clear reference to a document, custom, or practice that manifests an intent to include the referent." (a passing mention is no good)
- What are the three classes of Incorporation by Implication?
-
1) Implied-in-fact, based on actual intent of the parties
2) Implied-in-fact, based on interpretive intent
3) Implied-in-law - What are the elements of an Incorporation, Implied-in-Fact, based on the actual intent of the parties?
- The excluded terms must have been so clearly assumed in the minds of the parties that they were not included in the writing. Must be proven by a preponderance of the evidence.
- What are the elements of an Incorporation Implied-in-Fact based on the interpretive intent of the parties?
-
1) an unforeseen development occurs (subjective)
2) impact of the unforeseeable event makes the implication necessary to avoid a grossly unfair deal.
3) reasonable contracting parties would have incorporated the meaning in question had they foreseen the development (objective) - What are the elements of an incorporation Implied-in-Law?
-
Judge's discretion: should it be let in?
UCC-like gap fillers are allowed to effectuate some public policy.
- prior actions in this deal
- prior sequence of acts in other contracts
- trade usage
Cannot imply anything that contradicts the language of the written agreement. - Once the text to be interpreted is settled, what are the four steps of the actual interpretation?
-
1) Identify the Possible Meanings of the Language
2) Characterize Each Meaning by Type of Usage
3) Choose one of the Meanings
4) Construe the Term - What are the four theories for when extrinsic material may be taken into account in evaluating the meaning of a term?
-
Objective Theory
1) text and context
2) if no plain meaning, then extrinsic
Modified Objective Theory
1) text, context, and trade custom
2) if no plain meaning, then extrinsic
UCC 2-202
1) text, context, trade custom, course of dealings of the parties, course of performance of the parties
2) if no plain meaning, then extrinsic
Subjective Theory
All meanings considered: text, contenxt, and extrinsic evidence: "any evidence which demonstrates a meaning to which the language is 'reasonably susceptible.'" - What are the types of usage, and when should each be used?
-
General or Popular Usage
- always appropriate
Limited or Trade Usage
- both parties are members of the trade
- one party was not a member of the trade, but knew of or had reason to know of the usage.
- SoA: "The trade usage must be understood by the vast majority of members of the trade" vs. "the trade usage must be understood universally by members of the trade."
Mutual Usage
- agreement contains a glossary
- parties had a common interpretation of the wording.
Individual Usage
- one party understands the text with a particular meaning. the other knows or has reason to know that the first understands the term in that way. - What are the primary methods for choosing among valid meanings of a contract term?
-
Primary: Standards of Usage
* Williston
1) Mutual, if contains a glossary
2) General
3) Limited
4) Mutual, if no glossary
5) Individual
* Corbin
1) Mutual
2) Limited
3) General
4) Individual - Secondary method for choosing amongst valid meanings: Canons of Construction (RDPWLACPEE)
-
- K must be reasonable
- Course of dealings of the parties
- Course of performance of the parties
- The contract should be evaluated as a whole
- The contract must be lawful
- All parts of the contract should be effective
- Contra Proferentum
- Public Interest
- Expressio Unius est Exclusio Alterius
- Esjudem Generis - How can one construe the term, once its meaning is established?
-
It can be:
- a mere recital of fact
- a condition
- a duty
- a promissory condition - What are the secondary methods for choosing among valid meanings of a contract term?
-
Secondary: Canons/Maxims of Interpretation
- Reasonable Interpretation
- Circumstances of Execution/Course of dealings of the parties
- Contract as a whole
- Lawful Interpretation
- All parts should be effective
- Contra Proferentum - Interpret against the draftsman
- Public Interest
- Subsequent Conduct/Course of Performance
- Expressio Unius Est Exclusio Alterius
- Esjudum Generis