BUS311_chapter_07

The basic purpose of the rule is to protect the

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Unformatted text preview: l GPS units at no extra charge. Even if Seller did agree, the parol evidence rule prevents Buyer from raising the issue in court because it was not in the written contract, and thus Buyer is stuck with whatever the written contract provides. The basic purpose of the rule is to protect the integrity of written contracts and to prevent fraud by making it difficult to attack the validity of written terms through extraneous evidence that is not part of the written contract. The parol evidence rule applies to contracts for the sale of goods under Section 2-202 of the UCC with, as is often the case under the code, some modification of the common law rule. Under Section 2-202, terms included in a confirmatory memoranda of the contract or otherwise set down in writing as a final expression of the parties’ agreement cannot be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement. In this regard, the code agrees exactly with the common law parol evidence rule. However, Section 2-202 goes on to state that a written agreement may be explained or supplemented by parol evidence as to the following: 1. 2. 3. 4. rog80328_07_c07_134-156.indd 149 Evidence of statements made during negotiations before or during the making of a written contract cannot be introduced as evidence to contradict anything in the document. Comstock Images/Thinkstock course of dealing; usage of trade; course of performance; and consistent additional terms (unless the court finds the writing to have been intended as an exclusive statement of the terms of the agreement). 10/26/12 5:52 PM Section 7.5 The Parol Evidence Rule (§ 2-202) CHAPTER 7 Course of Dealing (§ 1-205(1)) Course of dealing is previous conduct by the parties that establishes a common basis of understanding for interpreting specific contract provisions and the conduct of the parties. When parties do business over a period of time, a mutual understanding can develop as to interpreting contractual provisions that may not be specifically stated in a contract. The UCC recognizes the importance of past conduct in interpreting the intent of the parties expressed in a written contract. Example 7.27. Buyer places an order for fifty 42” HD LCD television sets from seller. Nothing is stated as to method of payment or delivery. Normally, this would entitle seller to cash payment on delivery, and would allow her to ship via any commercially reasonable means. But if the buyer and seller have been doing business for years and seller has always shipped via UPS 2nd day air and accepted payment from buyer 30 days from delivery, buyer could present parol evidence as to the course of dealing between the parties to help interpret the contract (e.g., to show that seller was expected to ship via UPS 2nd day air and to be paid on a net-30 basis). Usage of Trade (§ 1-205(2)) The UCC defines usage of trade as “any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expect...
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This test prep was uploaded on 04/09/2014 for the course BUS 311 taught by Professor Parker during the Spring '10 term at Ashford University.

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