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11. Which of the following statements concerning these facts is most accurate?
The seller and the buyer recently entered into a contract for a single delivery of wheat at a price of $300,000. The same delivery procedure and invoice were used for this contract as had been used previously. The seller delivered the wheat and the buyer then signed the invoice. On the third day after delivery, the buyer received the following note from the seller: «Payment in full in accordance with signed invoice is due immediately. No discounts permitted. s/Seller.»
A seller and a buyer have dealt with each other in hundreds of separate grain contracts over the last five years. In performing each contract, the seller delivered the grain to the buyer and, upon delivery, the buyer signed an invoice that showed an agreed-upon price for that delivery. Each invoice was silent in regard to any discount from the price for prompt payment. The custom of the grain trade is to allow a 2% discount from the invoice price for payment within 10 days of delivery. In all of their prior transactions and without objection from the seller, the buyer took 15 days to pay and deducted 5% from the invoice price.
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B is correct. Though, as discussed above, the parol evidence rule bars evidence that contradicts the final written agreement, evidence of course of dealing, course of performance and trade usage may be introduced to supplement the written agreement. The UCC gives parties' course of dealing a greater weight than trade usage. Thus, the buyer is entitled to take a 5% discount if he pays within 15 days because the parties had repeatedly acted in such a manner that observance of this discount is justified.
A is incorrect. The written agreement was silent as to any discount. However, the parties' conduct and the parties' course of dealing was to provide 5% of the invoice if it was paid before 15 days. Evidence of this practice can be used to supplement the written agreement. Moreover, because the course of dealing is given greater weight than trade usage, course of dealing controls in this case. As such, a 5% discount if paid within15 days, rather than a 2% discount if paid within 10 days, is justified.
C is incorrect. Retraction or waiver is applicable when a party's conduct affirmatively demonstrates that the party is waiving a term of the written agreement. In this case, there is no waiver or retraction of a waiver because the facts show that the invoice was silent in regard to any discount from the price for prompt payment. In this case, the parol evidence rule will allow course of dealing and trade usage to aid in the interpretation or supplement the written agreement. As such, the agreement in this case, which is silent on the discount matter, should be interpreted to embody the course of dealing of the parties, which provided for a 5% discount if payment was made within 15 days.
D is incorrect. The parol evidence rule allows evidence that supplements the written agreement. Here, the agreement was silent as to a discount and the parties' course of dealing is admissible to supplement the invoice. The parties' course of dealing, and not the silent written agreement, applies in this case.