contractsII - Contracts II: Class Notes 8/9/2004 Revision...

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8/9/2004 Revision 0.1 Author: Philip Larson 703.798.5244 (tel) Contracts II: Class Notes
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Contracts II: Case Briefs Table of Contents 1. Lecture 1 .................................................................................................................................... 3 Philip Larson Page 2
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Contracts II: Case Briefs 1. Lecture 1 1.1 What is Contracts? - Interpreting the Terms of an Agreement: The UCC o Plain meaning (ex post) vs. Context (ex ante) o Context wants to know what these two people meant to the best of the court’s ability. Plain meaning wants to know what the document actually says, regardless of what they meant. o Size of audience: context (Small); plain meaning (Large) Columbia Nitrogen Corp. v. Royster Corp. Plaintiff Royster Corp. had been a long time customer of defendant Columbia Nitrogen. Then, plaintiff built a plant that made more phosphate than they could use, so, after long negotiations, agreed to sell the phosphate to defendant. The parties agreed to a minimum amount that would be provided and a set price. There was also a provision to escalate the price if the market changed. Disputed terms: Price, Quantity There is also an escalation clause . Allows you to change the price based on the cost of manufacturing. - Under the UCC, ambiguity is IRRELEVANT - Ambiguity is NEVER a relevant question when analyzing using the UCC The UCC ranks terms - express terms rank first - usage of trade ranks next UCC § 2-202 (and UCC § 1-205 and UCC § 2-208) - Can we explain (interpret) the terms - They can be explained by course of performance, usage of trade or express terms. - We still are asking whether the terms are contradicted… - B: don’t forget about the “Contradiction” term in the opening paragraph. - The contract is silent about price and quantity. - The UCC weakens the effect of merger clauses . 2/14/2004 - Reformation o Reformation was originally allowed to fix a transcription error when a secretary or someone typed up a final agreement. This was a tool for the court to step in and say there was a mistake that both parties want fixed. o Is the court supposed to be enforcing the parties intent or enforcing the terms as they are actually written? There is no legally clear answer to this. Courts go both ways. o What is the difference between reformation and modification? Philip Larson Page 3
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Contracts II: Case Briefs Reformation may be a more limited remedy that requires more than modification. Boardman does not think there is much difference in modern cases. o Boardman: Aluminum Co. of America v. Essex Group, Inc. - There are a few indices that go into the price. The one we are interested in . The non-labor production costs. A large portion of this is energy problem is that the price of oil has skyrocketed (OPEC crisis) so energy is much more expensive. ALCOA is getting screwed because their price term is insufficiently taking into
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contractsII - Contracts II: Class Notes 8/9/2004 Revision...

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