14. If the seller sues the buyer for breach of contract, may the buyer introduce evidence that the 5% discount was a term of the agreement?

The parol evidence rule bars parties to a written contract from presenting «extrinsic» evidence of terms in a contract that contradicts, modifies, or varies the terms of a written agreement when that written agreement is considered complete and finalized. A completely integrated agreement is an unambiguous written agreement that leaves no doubt that the parties intended it to be the final contract, and expresses the parties' full and exclusive agreement on a matter. The parol evidence rule, however, does not bar extrinsic evidence offered to aid in the interpretation of existing terms.

Under § 2-202 of the UCC, contract terms that are intended by the parties to be the final expression of their agreement can't be contradicted by evidence of any previous agreement or contemporaneous oral agreement but may be explained or supplemented by evidence of «consistent additional terms.» These consistent additional terms can be based on (i) course of performance; (ii) course of dealing; and (iii) trade usage. In sum, course of dealing, course of performance, and trade usage can be introduced as evidence to explain or supplement a written contract for the sale of goods, as long as the evidence doesn't expressly negate the express terms in the written contract. A course of dealing is a sequence of previous conduct between the parties to a particular transaction which establishes a common basis of understanding for interpreting their expressions and conduct. (UCC § 1-303(b)). Course of dealing may be admissible to interpret the existing written contract.

D is correct. As discussed above, under UCC § 1-303(b), course of dealing is defined as «a sequence of conduct concerning previous transactions between the parties to a particular transaction. . ..» In this case, the buyer had taken a 5% discount without objection from the seller on several past occasions. This sequence of conduct established a course of dealing. Evidence of course of dealing is admissible to explain or supplement a final written agreement even if the parties intended the agreement to be complete and final. As such, the course of dealing evidence is admissible under the UCC's parol evidence rule.

A is incorrect. Under the UCC's parol evidence rule, course of dealing evidence is admissible to explain or supplement a final written agreement. In this case, the buyer had taken a 5% discount on several past occasions and the seller failed to object. This pattern of conduct established a course of dealing between the parties. As such, the seller's objection to the 5% discount after the course of dealing was established, and after the buyer acted in accordance with the established course of dealing, was ineffective. Because the seller's objection was ineffective once the course of dealing was established and the buyer acted in accordance with the course of dealing, the evidence may be introduced.

B is incorrect. Even if a court finds a written agreement to be completely integrated and is the complete and exclusive agreement between the parties, the parol evidence rule does not bar extrinsic evidence offered to aid in the interpretation of existing terms. In this case, the parties' repeated conduct established a course of dealing. Under the UCC's parol evidence rule, course of dealing evidence is admissible to explain or supplement a final written agreement even if the parties intended the agreement to be complete and exclusive.

C is incorrect. This answer choice correctly states the law but is inapplicable to the facts. Under the UCC, any modification to an existing contract for the sale of goods does not require new consideration to be binding, so long as the parties act in good faith and agree to the modification. In this case, however, the enforceability of a modification is not at issue. This question is testing whether you recognize that the issue is whether the UCC's parol evidence rule will preclude the admissibility of evidence of course of dealing. Here, the facts state that the parties had previously contracted together and in those previous contracts the buyer had taken a 5% discount and the seller had not objected. These facts establish a course of dealing. The UCC's parol evidence rule allows for the admission of course of dealing evidence to aid in the interpretation or supplement a final written agreement.