Term Interpretation And Parol Evidence Outline

Implied terms

1. R2 § 204

2. Problems of autonomy:

   1. Lovers’ quarrel, failed business – pigeonholing facts into legal pattern: loan, capital investment, or gift. But neither thought of the matter under any sort of terms.

3. Courts sometimes must imply terms. Williams excerpt contrasts the 3 thought processes in reaching decision on implied term(pg 397):

   1. A term is implied based on what the parties probably had in mind but did not express.

   2. A term is implied based on what the parties probably would have agreed to had they thought about the matter.

   3. A term is implied for reasons of policy or fairness or as a matter of law.

      1. Corbin: (a) is interpretation; (3) is construction.

         1. Interpretation justifies a result by reference to party’s actual intent.

         2. Construction justifies a result by reference to what is reasonable, fair, good policy.

4. Haines v. New York (pg 399) – NY not obligated to expand sewage treatment facility; implicit in terms of contract which provide for expansion of sewer lines but did not mention the possibility of expansion of facility. Contract only calls for expanding the lines. No specific term. Court implies a “reasonable time” which it justifies by a presumption that a contract such as this is for a reasonable term. Reasonable term = while NY draws water from stream.

   1. Interpretation?

      1. Terms are being enforced as written

   2. Construction in the cloak of interpretation?

      1. Because court is relying on a legal presumption, which doesn’t even always apply. Court explicitly states that such a presumption should not, for policy reasons, apply to contracts of employment or exclusive agency (relationships presumed to be terminable at will)

   3. Why is NY not freed because of change in pollution control laws that eliminates need for NY to bargain for clean water?

      1. Principle that a contract is enforced as written in the event of a contingency not foreseen by the parties at the time of the contract.

         1. Consistent with general purpose of contract – to bind people in the face of an uncertain future

         2. Encourages planning and foresight

5. Spaulding v. Morse (pg 402) –Father to pay support for son until son graduated from college, but unforeseen event is that son is drafted before going to college. Father relieved from duty because neither mother nor son use money to provide care for son (court looks to the purpose of the contract)

   1. Principle stated above (i) is therefore not a categorical rule.

   2. Why differences in finding implied condition?

      1. In Haines, NY would have been relieved of obligation entirely. In Spaulding, only temporary cessation.

         1. Condition is more easily implied if it does less violence to the contract

      2. Condition in Spaulding goes along with general practice/understanding of why support is paid

      3. Court may worry about extortion in Haines (village relies on plant that NY controls)

      4. Not the same reliance, dependence, or chance for exploitation in Spaulding

6. Difference between misunderstanding and omitted terms?

   1. The problems seem different. In Raffles the misunderstanding was on a positive point of disagreement. One party thought the cotton was coming on the early Peerless, the other on the later Peerless.

   2. In Haines, the misunderstanding is on how to handle an unforeseen contingency.

      1. Opposing obligation here does less violence to parties’ autonomy

      2. it arguably is in their interest when they make the contract to empower a court to imply terms if necessary to make the contract effective

7. Acceptance by silence

   1. Vogt v. Madden (pg 491): Vogt sharecrops for Madden in 1979 & 1980. They discuss plans regarding renewal & a year later strongly disagree about what was said. Madden sells after Vogt has already put in work. Idaho SC says that silence cannot be construed as acceptance under R69 because in the 2 prior years, Vogt & Madden had made an express contract.

      1. Incorrect ruling because:

      2. It is not clear if/when Vogt plowed under second year wheat crop in preparation for next year, or how much work that entailed

      3. If Madden knew Vogt planned to do significant work in Aug/Sept only if agreement was renewed, then this expected reliance is a basis for treating Madden’s silence as acceptance.

      4. Court should have depended on

         1. Social practices

         2. Extent of the work

         3. Cost to Vogt

         4. Benefit to Madden

         5. Madden’s knowledge/reason to have knowledge

         6. Madden’s understanding that Vogt did the work on assumption the contract was renewed.

      5. Takeaways

         1. While silence can be acceptance, it is the exception, not the rule

   2. Restatement § 69(1) Silence is acceptance where...

(a): an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.

(b): the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer

1. application of the general principle that shared subjective understanding trumps objective or general meaning of words or conduct.

(c): Silence is acceptance where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.

3. Laural Race Courses v. Regal Constr. Co., pg 495: Laurel demands that Regal correct problems in construction. Regal proceeds to do so but after telling Laurel that it expects to be paid for the additional work if defects in its work did not create the problems. Laurel neither agrees nor disagrees but allows Regal to proceed.

   1. Held: Regal not responsible for the problems

4. Cole-McIntrye-Norfleet Co. v. Holloway, pg 495: C-M-N tried to protect itself from its salesmen binding it to a contract by using a home office acceptance clause. Notwithstanding this term, Holloway believed he had a contract for meal.

   1. Held: Holloway’s belief reasonable

      1. ...

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