Class 5 Notes

Trident V. Conn. Gen. Life Ins.
Judge Rules this case as not ambiguous. The interpretation of the clause by trident is not reasonable as the terms of the document give CG and not trident the rights of taking that 10% and because the documents clarify the ambiguity with very string language saying Trident does not have the right to repay for 12 years. - contextual approach -

The very purpose of the Parol Evidence Rule is to prevent reopening agreements.


Threadgill V. Peabody Coal Co.
There was no writeen agreement in this case and therefore PER doesn't come into play unless you have a writing.

For trade usage to be binding on the parties is that it was actual and constructive knowledge, so widely known and accepted that there is no other trade usage interpretation.

Evidence:
1. Testimony of trade usage.
2. Reasoning used: The risk is born by the party in control

Distinction made by court:
The court distinguishes between substantive rule of law and intent of the parties. The court rules the trade usage as mere evidence to the parties intent but not substantive law and therefore cannot agree to trade usage term without additional reasoning.

Trade Usage is a DEFAULT RULE: a gap filler, "what the parties will bargain around"

So if the parties have not discussed who will bare the risk, the trade usage will determine the optimal bargaining point/term.

Appellate court: says the trade usage here doesnt make the negligence by treadgill irrelevant. Parties according to state law cannot contract there way out of liability. If it violates public policy the court cannot enforce the Trade usage.

This Idea of trade usage can apply whether parties have a written agreement or not.

UCC - Ny has not yet adoopted the revised version of the law. Article 1-205

U.C.C. - ARTICLE 1- GENERAL PROVISIONS
§ 1-205. Course of Dealing and Usage of Trade.

(1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

(2) A usage of trade is any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage are to be proved as facts. If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court.

(3) A course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement.

(4) The express terms of an agreement and an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other; but when such construction is unreasonable express terms control both course of dealing and usage of trade and course of dealing controls usage of trade.

(5) An applicable usage of trade in the place where any part of performance is to occur shall be used in interpreting the agreement as to that part of the performance.

(6) Evidence of a relevant usage of trade offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise to the latter.

§ 1-303. Course of Performance, Course of Dealing, and Usage of Trade.

(a) A "course of performance" is a sequence of conduct between the parties to a particular transaction that exists if: (1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and (2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.

Hierarchy of Proof:
1. Express Language
2. Course of performance
3. Course of dealing
4. Trade usage

§ 2-202. Final Written Expression: Parol or Extrinsic Evidence.

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented

    * (a) by course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208); and
    * (b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement . 
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