Notes - Uniform Commercial Code §2-202

NOTE

1. Comment 3 to §2-202 states: "If the additional terms are such, that if agreed upon, they would certainly have been included in the document in the view of the court, then evidence of their alleged making must be kept from the trier in fact."

For a discussion of the problems that §2-202 presents from a draftsman's point of view, see Note, Contract Draftsmanship Under Article Two of the Uniform Commercial Code, 112 U. Pa. L. Rev. 564 (1964). The parol evidence rule applies only to prior and contemporaneous agreements; proof of subsequent agreements, even those that modify a completely integrated writing, is not barred by the rule. An oral modification may be unenforceable, however, if it does not comply with the Statute of Frauds or if the parties have provided that all modifications must be in writing; see §2-209(2) and (3).

2. In Columbia Nitrogen Corp. v. Royster Co., 451 F.2d 3 (4th Cir. 1971), a seller of fertilizer and fertilizer ingredients sued to recover damages resulting from the buyer's alleged breach of a contract to purchase phosphate. The contract provided that the buyer was to purchase a minimum of 31,000 tons of phosphate per year for three years, at a stated price (subject to an escalation clause dependent upon production costs). Following execution of the contract, the market price of phosphate dropped sharply. The parties negotiated a limited price reduction; despite this, the buyer agreed to accept only a fraction of the minimum tonnage specified in the contract. At trial, the buyer offered to prove a trade usage in the fertilizer industry according to which express price and quantity terms are treated as "mere projections to be adjusted according to market forces." Id. at 7. The court concluded that the buyer's evidence was not inconsistent with the express terms of the contract and could therefore be admitted, under §2-202, for purposes of interpretive clarification. "The contract is silent about adjusting prices and quantities to reflect a declining market. It neither permits nor prohibits adjustment, and this neutrality provides a fitting occasion for recourse to usage of trade and prior dealing to supplement the contract and explain its terms." Id. at 9-10. The contract also contained an integration clause stating that it expressed "all the terms and conditions of the agreement." Id. at 10. For a spirited criticism of the Columbia Nitrogen case, see Kirst, Usage of Trade and Course of Dealing; Subversion of the UCC Theory, 1977 U. Ill. L. Forum 811.