Week 8 - AEM 3200 WEEK8 Contract Interpretation 1 AEM 3200...

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AEM 3200 WEEK8 – Contract Interpretation 1
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AEM 3200 WEEK8 – Contract Interpretation Contract Interpretation A. Assuming there is a written agreement, issues of interpretation arise in two situations: when trying to change the written agreement by arguing that the parties meant something else. This is covered by the Parole Evidence Rule. When deciding what the terms of the contract mean when parties cannot agree. These are rules of contract interpretation. I I. Parole Evidence Rule (x[£»ª * ) A. Used in a trial situation. B. Written contract presumed to be complete. C. Therefore, no evidence of prior or contemporaneous agreements or negotiations may be admitted that would contradict or add to the writing. D. However, if PER exception present evidence admissible. E. A written contract should reflect what the parties think. If something else is assumed, add that in the writing. 1. Mistakes need correction - "meant this, but put that instead" , typo a. Contract is ambiguous - factual question. b. Date of performance, i.e. Feb 29, 2009 or Feb 28, 2009 or Feb 29, 2008? 2. Subsequent agreement at issue a. Flaw in contract 3. Defective assent or lack of consideration alleged. a. No consideration can mean there is no contract. 4. Condition precedent alleged a. Ex: Lease cars. Ones you can’t afford "Car leaser" finds a Chevy Corvette that he could lease at a Chevy Dealer. First buyer is interested but needs to get back to the dealer with an answer. Meanwhile, the car leaser gets the dealer to fill out all the paperwork prior to any deal. First buyer takes the car and the car leaser sues for breach of contract because he had all the paperwork 5. Prior course of dealing and trade usage relevant. a. Done prior business and assume that this is how business is done. The two companies have done a lot of business before and this is how it goes. Or this is the companies' first time doing business but this is how it is done in the industry. 6. Allegation that no contract intended. a. Factual issue. If everything is written down and signed then it is hard for the party to say it wasn't intended to be a contract. Can be said to be a draft, conversation paper. i. Merger clause = integration clause 2
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AEM 3200 WEEK8 – Contract Interpretation 3
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IV. Tradition and Past Conduct Ill. Merger or Integration Clause A. What is a merger clause? 1. Both parties agree that everything is written in the contract. Once you have one, there is no way that something else can be determined or the plan of action. 2. General Rule - merger clause bars parole evidence. 3. Exceptions: a. Allegation of fraud b. Condition precedent c. Inclusion in form contract d. See First Data POS, Inc. v. Willis, Case 18-4 - Says there is criminal misconduct in getting the contract B. Rules of interpretation 1. The parties' "primary purpose" will be given great weight.
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