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Term Interpretation And Parol Evidence Outline

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Implied terms a. R2 SS 204 b. Problems of autonomy: i. 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. c. Courts sometimes must imply terms. Williams excerpt contrasts the 3 thought processes in reaching decision on implied term(pg 397): ii. A term is implied based on what the parties probably had in mind but did not express. iii. A term is implied based on what the parties probably would have agreed to had they thought about the matter. iv. A term is implied for reasons of policy or fairness or as a matter of law.

1. Corbin: (a) is interpretation; (3) is construction. a. Interpretation justifies a result by reference to party's actual intent. b. Construction justifies a result by reference to what is reasonable, fair, good policy. d. 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. v. Interpretation?

1. Terms are being enforced as written vi. 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) vii. 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. a. Consistent with general purpose of contract - to bind people in the face of an uncertain future b. Encourages planning and foresight e. 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) viii. Principle stated above (i) is therefore not a categorical rule. ix. Why differences in finding implied condition?

1. In Haines, NY would have been relieved of obligation entirely. In Spaulding, only temporary cessation. a. 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 f. Difference between misunderstanding and omitted terms?
x. 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. xi. 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 g. 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. a. Incorrect ruling because: b. It is not clear if/when Vogt plowed under second year wheat crop in preparation for next year, or how much work that entailed c. 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. d. Court should have depended on i. Social practices ii. Extent of the work iii. Cost to Vogt iv. Benefit to Madden

v. Madden's knowledge/reason to have knowledge vi. Madden's understanding that Vogt did the work on assumption the contract was renewed. e. Takeaways i. While silence can be acceptance, it is the exception, not the rule ii.

2. Restatement SS 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 i. 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. a. 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. a. Held: Holloway's belief reasonable i. CMN's frequent contact with H ii. H 's reliance iii. Price increased iv. H asked CMN to begin shipment v. CMN may have been acting opportunistically; choosing to disavow the contract only because the price rose so high vi. Perishable nature of good

1. Like in Hobbs v. Massasoit Whip Co. (pg 486) where the buyer sits on perishable goods (snake skins) because there is a loss to the seller


6. 7.

8. a. Previous dealings is another basis for treating silence as acceptance in Hobbs. The previous dealings were that the buyer had not complained when the seller sent unordered snake skins in the past

2. Problem here: it doesn't really make sense when the seller is just sitting on an order vii. Court reject's custom argument (that other dealers in similar position nonetheless delivered the feed) - strict view of when an obligation can be implied as a matter of custom viii. Best R69(1) explanation = i(c), fitting in the "otherwise" category. If CMN was acting opportunistically, then the case would be pigeonholed under 1(b) Kukuska - pg 498: a crop insurer is under an implied duty to act within a reasonable time on an application for insurance. The insurer seems not to have acted in bad faith, rejecting the application after the loss occurred (or was looming). An argument for imposing a duty to act is that the insured is exposed to a loss in the interim and will not seek other insurance until it gets a response. That the premium is paid with the application strengthens the case for imposing a duty. Louisville Tin & Stove Co. v. Lay, p. 499: Ms. Lay exercised dominion over the goods when she instructed that they be picked up from the depot and delivered to her husband. She would have had no obligation is she left the goods at the depot. This is pretty clear if the goods are not perishable and her husband has no authority to deal on her behalf. R69(2): There is an implied in fact contract if "[a]n offeree . . . does any act inconsistent with the offeror's ownership of offered property." a. Statutory exemption: allows recipients of unordered goods received in the mail to treat them as a gift Nursing Care Services v. Dobos, p. 504. NCS provides Dobos with i) 2 weeks of in-hospital care; (ii) 48 hours of post-release care; and (iii) 2 weeks of at-home care. Dobos concedes she is liable for ii) because it was ordered by her daughter, presumably with an understanding it was to be paid for. Dobos thought Medicare would pay for service a. For (i), the rescuer rule (R3RUE SS 20) is a better basis that explaining it as an implied in fact contract (because she thought Medicare would pay) b. For (iii), easier to explain liability on grounds of an implied in fact contract. The rule conditions liability on an intent

to charge for the services. Is this the service provider's intent, the recipient's intent, or both? The contract law answer is that the service provider must reasonably believe the recipient intends to pay for the services. But according to the trial court Dobos reasonably believed Medicare would pay. This should preclude a finding an implied in fact contract. i. This suggests basis for the claim is restitution. (Implied in Law?) Like Raffles - mutual misunderstanding about Dobos' payment obligation was neither party's fault. Problems:

1. Benefit conferred is a service, and cannot be returned in kind

2. Why doesn't the anxiety with imposing a forced exchange on Dobos justify casting the loss on NCS?
a. Becasue services was of clear and significant value to Dobos b. Dobos bears some fault in not understanding her insurance position c. May encourage provision of the service

9. Day v. Caton - pg 511 - P builds common law straddling his and D's lot. P alleges there was an agreement that D would pay half expenses if he used the wall. D alleges no agreement. a. Held: D knew P was building wall on assumption D would pay half the cost. D's silence is deemed an apparent agreement to pay half. The opinion basically reasons D is under a duty to speak in this situation if he doesn't want to pay for the wall. This is an implied in fact contract under the rule in SS 69(1)(a). b. How does the theory of recovery bear on the measure of damages?
i. If Implied-In_Fact_Contract to pay half the cost of the work, then P might recover this amount whatever the value of work actually was to D ii. Restitution claim - P recovers nothing if he built wall intending to demand payment and knowing D had not yet agreed - this is so even if the benefit to D is clear. iii. Restitution claim - P recovers nothing, even if P builds the wall in the mistaken believe D has agreed to pay (or the belief he owns D's lot), if benefit to D is speculative iv. Restitution claim -MAYBE recovery if P acts based on mistake and benefit to D is clear and measurable

1. But Restatement illustrations indicate this is not obvious

2. If P does recover he will get only a lien on D's property. P will be paid for the benefit of the work only if and when D sells the property. This eliminates the forced exchange.

10. Bastain v. Gifford (pg 514) - P prepared architectural plans that were never used by D. a. If restitution claim then damages would only be for the return of the plans. b. If implied in fact contract (to pay for the services), then damages would be the going rate for the services preparing the plan

11. Allen v. Dunston- Dunston has life estate on rural land adjacent to the Allens. Tumble Rock holds the remainder. Dunston and the Allens correspond regarding their building a water well on her land. Apparently Dunston indicates she is agreeable. At this point the Allens built the well. Dunston acknowledges the well has been build in a post card and says there is "no hurry to get lease or easement done." Some time later she sends draft easement to the Allens and Tumble Rock. This deal is never finalized. Allens sue for injunction protecting the right to use the well. Tiral court finds apparent agreement. a. Held: The ISC found no contract because key terms were unresolved, in particular the form of the grant (easement or lease (I think they mean license)) and whether the grant survives Dunston (i.e., was Tumble Rock a party to the grant). The permission that was given does not constitute a contract. b. Either way, the court would have denied Dunston relief if they had sought an order to compel Allens to remove the well, because of equitable estoppel c. Court won't grant Allen's an easement, nor will it issue an order requiring removal of the well. The blunt tools of the law cannot do justice here. d. On remand: If the Allens did not reasonably think they had permission to build the well (and some sort of right to use I suppose), then they are in a position akin to a mistaken improver. i. But Dunson's liability in restitution for the well should be small, and tke the form of a lien of little value as she is unlikely to sell her life estate. (ISC probably had more substantial restitution claim in mind, but there's not likely a legal basis for this) e. Alternatively: the court could have found that Dunston gave the Allens permission to build a well but there was

no agreement as to the term. The issue then would be whether the permission (either for an easement or a license) was terminable at will. i. Haines v. New York (pg 399): generally an openended agreement is presumed to run for a reasonable time - neither perpetual nr terminable at will.

1. Exception: contracts of employment ii. Court may hold in Allen that a reasonable time would be the time sufficient for the Allens to recoup their investment on the well b. Implied in Law Contract i. Claims grounded in the law of restitution and unjust enrichment ii. P's mistake can be regarding the existence of a valid and enforceable contract with D. (Frigaliment) iii. If there is a misunderstanding regarding existence/terms of contract
& D is more at fault - the, the misunderstanding can be resolved against D using contract law by enforcing the contract P reasonably thought D agreed to. iv. Non Benefits Based Restitution claim

1. Restitution damages measured by reasonable cost of performance (not its value to D) (and only in the event of a substantial breach);

2. Or when a contract is unenforcable under the statute of frauds a. Neither imposes forced exchange on D because in both, D requested and agreed to pay for the performance v. Wagenseller v. Scottsdale Memorial Hospital - pg 516 - Wagenseller claimed she was terminated by a supervisor in retaliation for her refusal to engage in wild behavior in a rafting trip and afterwards, and in particular for refusing to engage in a skit "Moon River" that involving mooning people. Until the trip her work record was exemplary.

1. Employment at will doctrine

2. 3 legal claims potentially available to an 'at will' employee for wrongful termination a. Public policy exception - aka retaliatory discharge or wrongful discharge (tort) b. Personnel policy manual exception - failure to follow established personnel policies (contract) c. Good faith and fair dealing exception (contract) d. Note: there is a large variation across states and over time on the scope of these theories. (TX rejects duty of good faith/fair dealing entirely)

3. Held: duty of good faith applies to at-will employment contract, but firing employee for no good reason is not a breach of the

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