Interpretation
What are the secondary rules of interpretation?
(1) A preference to interpret contracts as valid, lawful, and reasonable. (2) If there's a conflict between clauses, either the first-used clause controls (more traditional) or the one that seems more dominant (more modern). (3) Ejusdem Generis (4) Interpretation Against the Drafter (the one who introduced the ambiguity)
What is the analytical framework for the parole evidence rule?
(1) Determine Integration: Is the writing a partial or total integration? (2) Determine Admissibility: Is the evidence a contradictory or a consistent additional term? (3) Consider exceptions.
What types of extrinsic evidence are not barred by the parol evidence rule?
(1) Evidence offered to interpret an ambiguous term (2) Evidence of subsequent oral or written agreements (3) Evidence showing fraud, mistake, duress, undue influence, or other voidability (4) Evidence of collateral agreements with separate consideration (5) Evidence of conditions precedent to the formation of a contract
What is the analytical framework for interpreting ambiguous terms?
(1) Identify Interpretation Issues: Requires a dispute over meaning and the existence of an ambiguity. (2) Apply Primary Rules: Determine the intent of the parties by considering express language, course of performance, course of dealing, and trade usage. (3) Apply Secondary Rules (If Needed)
In what order do courts prioritize the primary rules of interpretation?
(1) Language of Express Terms (2) Course of Performance/Conduct (3) Course of Dealing (4) Trade Usage/Custom
What factors does a modern jurisdiction look at to determine if a writing is integrated?
(1) Merger clause (2) Amount of detail in the writing (3) Nature of the writing (4) Formalities observed in drafting and executing the agreement (5) Relationship of the parties and past dealings (6) Type of transaction and business practices (7) Nature of the parol evidence - Would evidence being introduced normally and naturally be omitted from a writing?
What are the two types of ambiguities?
Patent and Latent ambiguities. Patent: The plain meaning of the language is ambiguous. Latent: Additional outside evidence is needed to show that the term is ambiguous. JURISDICTION NOTE: Classic only looks at patent ambiguities. Modern looks at both.
What is the difference between a totally and partially integrated writing?
A writing is totally integrated if it is a final and complete expression of the agreement. Effect: No extrinsic evidence is admissible, whether its a contradictory term or a consistent additional term. A writing is partially integrated if it is a final but incomplete expression of the agreement. The parties intended the document to reflect only part of their agreement. Effect: Only consistent additional terms admissible; no contradictory terms.
When does an ambiguity exist?
An ambiguity exists if (1) the meaning of the term is uncertain or (2) the term is reasonably susceptible to more than one interpretation.
What is the difference between a "course of performance" and a "course of dealing"?
Course of Performance: applies when one contract calls for repeated instances of performance. Parties are treating each other in a certain manner without objection, and this performance establishes an agreement by the parties as to their obligations under the contract. Course of Dealing: Applies when parties in the past entered into multiple contracts of a similar nature to the present contract. The parties have dealt with each other in a consistent manner in the past, and that past conduct establishes duties that were expected under the present contract.
How does a court determine if a document is integrated?
Depends on the jurisdiction. Classic (Minority) Court only looks within the four corners of the writing itself to determine integration. A writing is totally integrated if it appears complete and unambiguous on its face. A merger clause is dispositive. Modern (Majority) The court may consider all of the surrounding facts and circumstances including and beyond the writing to determine whether the writing is integrated. A merger clause is just one factor to consider.
What is the difference between the common law and UCC in terms of the parol evidence rule?
The UCC is more liberal in terms of allowing extrinsic evidence. Court assumes that the writing will be incomplete with respect to course of dealing, usage of trade, and course of performance. Consistent additional terms allowed unless a party can show the writing was intended to be fully integrated.
How does the court determine the meaning of express terms?
The court considers the (1) ordinary (plain) meaning, (2) the technical meaning, and (3) the surrounding facts and circumstances and in the context of the rest of the contract.
What is the role of the judge and the jury when it comes to the parol evidence rule?
The judge decides whether the evidence is admissible. The jury decides if the evidence is persuasive enough to vary or supplement the written agreement.
What is the parol evidence rule?
The method courts use to determine whether a jury can hear evidence other than the writing to determine the duties of the parties.
How is "trade usage" used when interpreting ambiguous terms?
When defining the meaning of an express technical term, trade usage is given more weight in the analysis. When defining a customary practice, it's less influential than the express language of the contract and the course of performance.
When does a term have a "technical meaning"?
When the word had a meaning other than the ordinary meaning depending on the place, business, or profession. A trade usage.
What is ejusdem generis?
Where specific terms describing person or things are described by general terms, the general words should be interpreted as applying only to persons or things of the same kind or class those expressly mentioned.