1. 1 George Mason School of Law Contracts II Terms F.H. Buckley fbuckley@gmu.edu

2. So now we have an enforceable contract But what is its content? 2

3. Sir William Blackstone 3 First, Some Legal History

4. Sir William Blackstone  I t is better that 10 guilty men should go free than that one innocent man suffer.  The public good is in nothing more essentially interested, than in the protection of every individual's private rights.  Free men have arms; slaves do not.  Herein indeed consists the excellence of the English government, that all parts of it form a mutual check upon each other.  Every wanton and causeless restraint of the will of the subject, whether practiced by a monarch, a nobility, or a popular assembly, is a degree of tyranny. 4

5. Sir William Blackstone 5 Henry Fonda in Ford’s Young Mr. Lincoln Maybe I should take up this legal thing…

6. A Trio of English Judges Sir George Jessell M.R. 6 Pender v. Lushington In re Hallett’s Estate Printing v. Sampson

7. A Trio of English Judges Lord Blackburn 7 Tweedle v. Atkinson Taylor v. Caldwell Hughes v. Metropolitan Ry

8. A Trio of English Judges Bramwell L.J. 8 Bank of England v. Vagliano Rylands v. Fletcher

9. What had all these men in common? Sir George Jessell M.R., Lord Blackburn, Bramwell L.J. 9

10. John Stuart Mill 10

11. Samuel Williston 11 1861-1963

12. Arthur Corbin 12 1874-1967

13. Karl Llewellyn 13 1893-1962

14. Identifying the Terms and Interpreting them  In either case, do we look outside the written contract? Oral statements Course of dealings Trade customs 14

15. Here’s a thought…  Why not just ban written contracts? The letter enslaves and the spirit makes free. 15

16. What would we lose if we banned written contracts?  Certainty as to terms Recall McIntosh p. 518 16

17. What would we lose if we banned written contracts?  Certainty as to terms  Agency Costs of Seller’s Agents 17

18. What would we lose if we banned written contracts?  Certainty as to terms  Agency Costs of Seller’s Agents  Adjudication and Litigation Costs 18

19. What happens where there is a writing?  First question: Is this a binding contract? As opposed to yesterday’s shopping list… Or a memo about preliminary negotiations Or an offer 19

20.  First question: Is this part of a binding contract? Qu. Merit Music at 429  “I imagined it was a note.” What if that was Merit Music had told him? 20 What happens where there is a writing?

21.  First question: Is this part of a binding contract? Qu. Merit Music at 429  “I imagined it was a note.”  Non est factum: Restatement §§ 163, 211(c), 214(d) 21 What happens where there is a writing? 21

22.  First question: Is this part of a binding contract? Birmingham TV p. 431  What if the writing on the back had been brought to the bailor’s attention? 22 What happens where there is a writing?

23.  First question: Is this part of a binding contract? Birmingham TV p. 431  What if it had been signed? Restatement §§ 211(a) 23 What happens where there is a writing?

24. Can we look behind a signed written contract for the terms of the contract?  Integrated Agreements Restatement § 209(1)  Does this exclude oral evidence? See Comment a 24

25. Can we look behind a signed written contract for the terms of the contract?  Integrated Agreements  Additional terms supplied by courts  Fair dealing: Restatement § 205  Good title: UCC § 2-312  Merchantability: UCC § 2-314  Fitness for purpose: UCC § 2-315 25

26. Can we look behind a signed written contract for the terms of the contract?  Integrated Agreements Supplying omitted essential terms: Restatement § 204  The one-year term on employment in McIntosh 26

27. Can we look behind a signed written contract for the terms of the contract?  Integrated Agreements Supplying omitted essential terms: Restatement § 204 Gap-filling as a method of reducing transaction costs 27

28. Can we look behind a signed written contract for the terms of the contract?  The Parol Evidence Rule A agrees to sell his house to B in a signed agreement on Feb. 20. On the same day B sells a painting to A in an oral agreement. Problems? 28

29. Can we look behind a signed written contract for the terms of the contract?  The Parol Evidence Rule A agrees to sell his house to B in a signed agreement on Feb. 20. On the same day B sells a painting to A in an oral agreement. Problems? Williston at 546 on collateral contracts  How to tell them apart? 29

30. Suppose we have a signed written contract Can we ever look beyond it?  The test in Mitchill v. Lath 30 Ice House

31. Parol Evidence Rule  The test in Mitchill v. Lath In form a collateral agreement Can’t contradict the written agreement* One that would not ordinarily be embodied in the writing 31 *Cannot “add to, vary or contradict”: Burke at 554 31

32. Parol Evidence Rule  The test in Mitchill v. Lath In form a collateral agreement Can’t contradict the written agreement One that would not ordinarily be embodied in the writing  What was the oral agreement here? 32

33. Parol Evidence Rule  The test in Mitchill v. Lath In form a collateral agreement Can’t contradict the written agreement One that would not ordinarily be embodied in the writing  Andrews: Πs fail no. 3 and maybe no. 2 33

34. Parol Evidence Rule Would the ice house covenant naturally be found in the land sale contract? What would Williston say? 34 Chief Judge Irving Lehman 34

35. Masterson v. Sine 35 Chief Justice Roger Traynor Jones v. Ahmanson Escola v. Coca-Cola Pacific Gas infra Perez v. Sharp

36. Masterson v. Sine 36 Chief Justice Roger Traynor Justice Louis H. Burke

37. Masterson  What was the oral modification? 37

38. Masterson  What was the oral modification? Dallas reserves an option to repurchase which does not convey to his assigns 38

39. Masterson  What was the oral modification? What happens if an agreement is fully integrated per Traynor? 39

40. Masterson  What was the oral modification? What happens if an agreement is partly integrated per Traynor? 40

41. Masterson  What was the oral modification? How to tell if a writing is completely or partially integrated per Traynor? 41

42. Masterson  What was the oral modification? How to tell if a writing is completely or partially integrated per Traynor?  “Any such collateral agreement must itself be examined…”?? 42

43. Masterson  What was the oral modification? How to tell if a writing is completely or partially integrated per Traynor?  “The conception of a writing as wholly and intrinsically self-determinative…”??? 43

44. Masterson  Traynor on Parol Evidence Would the reference excluding assigns “naturally be made as a separate agreement”? 44

45. Masterson  Traynor on Parol Evidence Would the reference excluding assigns “naturally be made as a separate agreement”? Is this about identifying the terms of the agreement or interpreting them? 45

46. Masterson  Are Burke’s charges correct? The change contradicts a term which would ordinarily be supplied by operation of law. 46

47. How does the Restatement handle this?  Which way does the Restatement come down? Traynor or Andrews? Cf. §§ 209(2), 210(3) comments 47

48. How does the Restatement handle this?  Which way does the Restatement come down? Traynor or Andrews? Cf. § 214 48

49. How does the Restatement handle this?  Which way does the Restatement come down? Traynor or Andrews? Cf. § 215 49

50. How does the Restatement handle this?  Which way does the Restatement come down? Traynor or Andrews? Cf. § 216  Separate consideration: Illustration 3  Terms omitted naturally: Illustration 7 50

51. 51 George Mason School of Law Contracts II Terms F.H. Buckley fbuckley@gmu.edu

52. The Content of the Contract  When can one look behind a writing for evidence of the terms of a contract? Traditionally Parol Evidence could not “add to, vary or contradict” a writing 52

53. The Content of the Contract  When can one look behind a writing for evidence of the terms of a contract? Traditionally Parol Evidence could not “add to, vary or contradict” a writing  Doesn’t include gap-filling terms, e.g. UCC warranties 53

54. The Content of the Contract  When can one look behind a writing for evidence of the terms of a contract? Traditionally Parol Evidence could not “add to, vary or contradict” a writing  Non est factum: Exception for fraud, duress, mistake. Restatement §§ 163, 211(c), 214(d) 54

55. The Content of the Contract  When can one look behind a writing for evidence of the terms of a contract? Traditionally Parol Evidence could not “add to, vary or contradict” a writing  “Consistent additional terms”: Restatement § 216(2) 55

56. How does UCC 2-202 handle this? 56

57. How does UCC 2-202 handle this?  The writing may be explained or supplemented with consistent additional terms unless the writing was intended as complete and exclusive 57

58. How does UCC 2-202 handle this?  Comment 3: would the oral term “certainly” have been included in the writing? How does this compare with restatement § 216(2)(b): would the oral term “naturally” be omitted? 58

59. How does UCC 2-202 handle this?  Comment 3: would the oral term “certainly” have been included in the writing? How does this compare with restatement § 216(2)(b): would the oral term “naturally” be omitted?  Which language is narrower? 59

60. How does UCC 2-202 handle this?  Hunt Foods What was the allegedly omitted term? 60

61. How does UCC 2-202 handle this?  Hunt Foods What was the allegedly omitted term?  Why do you think Hunt refused to include the term in the writing? 61

62. How does UCC 2-202 handle this?  Hunt Foods What was the allegedly omitted term?  Why do you think Hunt refused to include the term in the writing? Were these sophisticated parties? 62

63. How does UCC 2-202 handle this?  Hunt Foods What was the allegedly omitted term?  “It is not sufficient that the existence of the condition is implausible. It must be impossible.” 63

64. How does UCC 2-202 handle this?  Snyder What was the alleged omitted term? 64

65. How does UCC 2-202 handle this?  Snyder Is a cancellation clause inconsistent with the written contract?  Why might Greenbaum have wanted to exclude unilateral exit rights? 65

66. Merger Clauses  Traynor at 551 66

67. Merger Clauses  Danann at 418 How was the clause different? And what was special about the omitted testimony? 67

68. Merger Clauses: UAW 68 Doral Resort and Country Club, Miami

69. Merger Clauses: UAW You tellin’ me I should stay at a scab hotel!!! Concerned Union Executive 69

70. Merger Clauses: UAW  Roush’s evidence 70

71. Merger Clauses: UAW  Can you think of something the UAW could have done to satisfy its concerns? 71

72. Merger Clauses: UAW  Can you think of something the UAW could have done to satisfy its concerns? Markman: The Parol Evidence Rule gives the parties the incentive to cure the problem in the express contract 72

73. Merger Clauses: UAW  Williston and Corbin on merger clauses  Should freedom of contract govern? Can the parties bargain around exceptions to the Parol Evidence Rule?  Markman’s specter of “super-merger clauses” 73

74. Merger Clauses: UAW  Williston and Corbin on merger clauses Do they end up in the same place? 74

75. Merger Clauses: UAW  Williston and Corbin on merger clauses Do they end up in the same place?  Dueling quotes from Corbin Pp. 565, 566, 571, 572, 573 75

76. Merger Clauses: UAW  What was the allegation of fraud? 76

77. Merger Clauses: UAW  What was the allegation of fraud? Did Carol Management falsely represent that the union clause was in the contract? Or that there was no merger clause? 77

78. Merger Clauses: UAW  What was the allegation of fraud? Did Carol Management falsely represent that the union clause was in the contract? Or that there was no merger clause? Keeping mum about plans for sale of the hotel? 78

79. Merger Clauses: UAW  What was the allegation of fraud? Did Carol Management falsely represent that the union clause was in the contract? Or that there was no merger clause? Keeping mum about plans for sale of the hotel?  Was there an assertion that CMC or Roush knew that the new owners would fire all the staff. Did she know she was about to be fired? 79

80. Merger Clauses: UAW  What was the allegation of fraud? Did Carol Management falsely represent that the union clause was in the contract? Or that there was no merger clause? Keeping mum about plans for sale of the hotel?  Was there an assertion that CMC or Roush knew that the new owners would fire all the staff. Did she know she was about to be fired?  And if, per impossibilia, she did? Restatement § 161 80

81. Successor Liability  A contracts with noted artist B to paint a picture for $10,000. B delivers the picture, but is not paid.  A sells the picture to C, without telling him that B has not been paid.  Can B sue C for the purchase price? 81

82. Successor Liability  A contracts with noted artist B to paint a picture for $10,000. B delivers the picture, but is not paid. A sells the picture to C, without telling him that B has not been paid. Can B sue C for the purchase price? UCC § 2-403(1) A purchaser of goods acquires all title which his transferor had. 82

83. Successor Liability  A contracts with noted artist B to paint a picture for $10,000. B delivers the picture, but is not paid. A sells the picture to C, without telling him that B has not been paid. Can B sue C for the purchase price? So did A acquire title from B? 83

84. Successor Liability  A contracts with noted artist B to paint a picture for $10,000. B delivers the picture, but is not paid. A sells the picture to C, without telling him that B has not been paid. Can B sue C for the purchase price? UCC § 2-401(2) 84

85. Successor Liability  A Corp. merges with B Corp. The new corporation is called “B Corp.”  C had a claim against A Corp.  Can C bring this claim against B Corp.? 85

86. Successor Liability  A Corp. sells all its assets to B Corp.  C had a claim against A Corp.  Can C bring this claim against B Corp.? 86

87. Successor Liability  A Corp. sells all its assets to B Corp. C had a claim against A Corp. Can C bring this claim against B Corp.? The De Facto Merger Doctrine 87

88. Successor Liability  A Corp. sells all its assets to B Corp. C had a claim against A Corp. Can C bring this claim against B Corp.? The De Facto Merger Doctrine Suppose you are counsel for B Corp. How do you react to the prospect of such liability before the asset sale? 88

89. Successor Liability  A Corp. sells all its assets to B Corp. C had a claim against A Corp. Can C bring this claim against B Corp.? But is there an assertion of a de facto merger or successor corporation liability here? 89

90. UAW  On Holbrook’s analysis, what does a merger clause do? 90

91. UAW  On Holbrook’s analysis, what does a merger clause do?  What sense do you make of restatement § 216, cmt e 91

92. UAW  On Holbrook’s analysis, what does a merger clause do?  Seibel at 577 92

93. UAW  How would Markman have decided Hachmeister at p. 572? 93

94. UCC 2-316  What does this do to merger clauses? 94

95. 95 George Mason School of Law Contracts II Interpretation F.H. Buckley fbuckley@gmu.edu