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:
(Code 1933, § 109A-2 - 202, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2015, p. 996, § 3B-2/SB 65.)
The 2015 amendment, effective January 1, 2016, substituted the present provisions of paragraph (a) for the former provisions, which read: "By course of dealing or usage of trade (Code Section 11-1-205) or by course of performance (Code Section 11-2-208); and".
Editor's notes.- Ga. L. 2015, p. 996, § 1-1/SB 65, not codified by the General Assembly, provides: "(a) This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'
"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."
Law reviews.- For article, "Consumer Protection Against Sellers Misrepresentations," see 20 Mercer L. Rev. 414 (1969). For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988).
JUDICIAL DECISIONSANALYSIS
General Consideration
No other construction of contract allowed.
- Where the language of the contract is plain, unambiguous, and capable of only one reasonable interpretation, no other construction is permissible. Golden Peanut Co. v. Hunt, 203 Ga. App. 469, 416 S.E.2d 896 (1992).
Parol evidence of prior agreement not effective to vary terms of writing.
- Parol evidence as to terms of agreement made prior to execution of document is not effective to vary terms of written contract. Romines v. Wagstaff Motor Co., 120 Ga. App. 608, 171 S.E.2d 752 (1969); Hill Aircraft & Leasing Corp. v. Planes, Inc., 158 Ga. App. 151, 279 S.E.2d 250 (1981).
Express terms of written contract generally may not be materially varied by parol evidence of prior agreement or of contemporaneous oral agreement between parties. Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975).
Parties bound by writing.
- In dispute over meaning of contract and subsequent acts of parties to it during execution thereof which is not over language of the contract, a party is bound by what has been reduced to writing. R.S. Helms, Inc. v. GST Dev. Co., 135 Ga. App. 845, 219 S.E.2d 458 (1975).
O.C.G.A. § 11-2-306(1) precludes a finding that a contract for requirements is too indefinite, since the quantity is determined by the actual good faith requirements of the particular party. O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).
Cited in Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975); Richards & Assocs. v. Fidelity Sound, Inc., 137 Ga. App. 752, 224 S.E.2d 832 (1976); Atlanta Army & Navy Store, Inc. v. Stuckman, 143 Ga. App. 850, 240 S.E.2d 220 (1977); Corbett v. North Fla. Clarklift, Inc., 155 Ga. App. 701, 272 S.E.2d 563 (1980); Troutt v. Nash AMC/Jeep, Inc., 157 Ga. App. 399, 278 S.E.2d 54 (1981); Chatham v. Southern Ry., 157 Ga. App. 831, 278 S.E.2d 717 (1981); David J. Joseph Co. v. S & M Scrap Metal Co., 163 Ga. App. 685, 295 S.E.2d 860 (1982); W. Linton Howard, Inc. v. Gibbs Mach., Inc., 169 Ga. App. 627, 314 S.E.2d 259 (1984).
Legislative Intent
Oral contracts enforceable.
- Existence of O.C.G.A. § 11-2-202 indicates that terms of oral contracts are enforceable under Uniform Commercial Code. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).
O.C.G.A. § 11-2-202 requires courts to apply to contracts the meaning intended by parties. See R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973), aff'd, 494 F.2d 41 (5th Cir. 1974).
Section intended to prevent false claims of oral warranties.
- O.C.G.A. § 11-2-202 was intended to allow sellers to prevent buyers from making false claims of oral warranties in contract actions. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).
Liberalization of parole evidence rule.
- O.C.G.A. § 11-2-202 was intended to liberalize common-law parol evidence rule to allow evidence of agreements outside contract without a prerequisite finding that contract was ambiguous. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
Admission of evidence contradicting express terms of contract ignores purpose of section.
- To admit evidence of agreement contradicting express terms of contract would clearly eviscerate purpose of O.C.G.A. § 11-2-202. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
Construction and Application
Consideration given to official comments.
- O.C.G.A. § 11-2-202 was adopted verbatim from § 2-202 of the Uniform Commercial Code and therefore, in its application by Georgia courts, intentions of drafters of the Uniform Commercial Code as evidenced in official comments to it should be given due consideration. Warren's Kiddie Shoppe, Inc. v. Casual Slacks, Inc., 120 Ga. App. 578, 171 S.E.2d 643 (1969).
Effect of allowing challenges to specific agreements by extrinsic evidence.- In contracts which set out fairly specific quantity, price, and time specifications, to allow such specific agreements to be challenged by extrinsic evidence might jeopardize certainty of contractual duties which parties have right to rely on. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
Unreasonable construction of contract.- Construction of contract which negates its express terms, allowing unilateral abandonment of specifications, is patently unreasonable. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
Contracts to be interpreted in light of commercial setting.
- O.C.G.A. § 11-2-202 requires that contracts be interpreted in light of commercial context in which they were written and not by rules of legal construction. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
Evidence admissible to show written confirmation incorrectly stated terms of prior oral agreement.- Recognizing extensive use of oral contracts in securities and commodities markets it is clear that if use of oral contracts is to be fostered, party seeking to enforce oral contract should not be prevented from doing so merely because an alleged written confirmation incorrectly stated terms of prior oral contract. If the law was construed differently, a party to an oral contract could easily elude enforcement by sending a confirmatory memorandum which incorrectly stated all terms of prior oral contract. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).
Contract established by memorandum, correspondence, and agreement despite indefinite quantity term.- Where the evidence demonstrated that both parties intended a requirements contract based on purchaser's good faith needs for the trademarked yarns and the existence of this contract was established by a memorandum, the correspondence between the parties, and a trademark licensing agreement which was to remain in effect subject to cancellation by either party on 90 days' notice, the indefiniteness of the written quantity term did not invalidate the contract. O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).
Actual agreement not contained in one document.
- Trial court correctly considered matters outside a buyer's request for quotation (RFQ) to determine the intended final obligations of the buyer and a seller under their agreement because the evidence supported the trial court's finding that the parties' actual agreement was not contained in any one document, such as the RFQ, since the RFQ anticipated that necessary terms such as material specifications, quantities, pricing information, and delivery dates would be supplied as part of the bidding and ordering process; because before, during, and after accepting the seller's bid, the buyer was aware of the seller's overseas supply chain and did not object to the seller's stated reliance on a promised three-month forecast to obtain material, the trial court did not err in construing the written terms of the contract in light of that understanding and thereby denying the buyer cover damages for items exceeding the usage data provided to the seller. Scovill Fasteners, Inc. v. Northern Metals, Inc., 303 Ga. App. 246, 692 S.E.2d 840 (2010).
Where parties disagree on terms, evidence of prior oral agreement admissible.
- O.C.G.A. § 11-2-202 forbids use of evidence of prior agreements only with respect to terms in confirmatory memoranda to which parties agree, and where parties disagree on every term in alleged confirmatory memorandum, this section will not prohibit use of evidence of any prior agreement. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).
Where implied warranties are properly excluded, evidence of prior or contemporaneous parol agreements not admissible.
- Where provisions of contract meet requirements of O.C.G.A. § 11-2-316 and no implied warranty arises out of the transaction, either as to merchantability or as to fitness for a particular purpose, evidence of a contradictory prior or contemporaneous parol agreement is prohibited. Avery v. Aladdin Prods. Division, Nat'l Serv. Indus., Inc., 128 Ga. App. 266, 196 S.E.2d 357 (1973).
Evidence of samples admitted to support claim of breach of express warranty by sample.- Because there was no indication that the written contract was a complete and exclusive statement of the agreement between the parties, and because the terms expressed by the sample did not contradict those in the written contract, the parol evidence rule did not prevent the admission of evidence of peanut samples sent by the seller to describe what the buyer would receive in bulk shipment to provide a foundation for the claim against the seller for breach of express warranty by sample. Alimenta (U.S.A.), Inc. v. Anheuser-Busch Cos., 803 F.2d 1160 (11th Cir. 1986).
Unambiguous agreement cannot be modified.
- Where the clear intention of the parties was that if they could not agree upon a price, seller could then entertain bona fide purchase offers from any third party, buyer cannot modify that unambiguous agreement by use of parol evidence to additionally require the bona fide offer to come from a federally registered peanut handler. Golden Peanut Co. v. Hunt, 203 Ga. App. 469, 416 S.E.2d 896 (1992).
The phrase "local taxes," as used in contracts which excluded local taxes from the lump sum purchase price for advertising signs, did not include state sales taxes, where the phrase was at best an ambiguous phrase, admitting of no single, reasonable meaning, without resort to construction. Outdoor Displays Welding & Fabrication, Inc. v. United States Enters., Inc., 84 Bankr. 260 (Bankr. S.D. Ga. 1988).
Parol evidence admissible if no final sales price.
- Where written contracts were not intended by the parties as a complete and exclusive statement of the agreed upon terms, because only a floor price, rather than the final sales price, was stated, parol evidence as to the parties' prescribed method for fixing the final price was admissible. Golden Peanut Co. v. Bass, 275 Ga. 145, 563 S.E.2d 116 (2002), cert. denied, 537 U.S. 886, 123 S. Ct. 32, 154 L. Ed. 2d 146 (2002).
Usage of Trade, Course of Dealing, and Course of Performance
Customs of trade considered in interpreting contract terms.
- Customs of trade should be relevant to interpretation of certain terms of contract, and should be considered in determining what variation in specifications is considered acceptable. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
Contracts are to be interpreted with assumption that usages of trade were taken for granted when document was phrased. Unless carefully negated they become an element of meaning of words used. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
Modification need not be in writing.
- Modification or restitution of the remedy available for breach of warranty need not be in writing. Parole evidence to show the usage of the trade to explain or supplement the available remedies for breach of warranty was improperly excluded. Topeka Mach. Exch., Inc. v. Stoler Indus., Inc., 220 Ga. App. 799, 470 S.E.2d 250 (1996).
When contract terms and trade usage construed as consistent.
- The express terms of a contract and trade usage shall be construed as consistent with each other only when such construction is reasonable and a construction which negates the express terms of the contract by allowing unilateral abandonment of its specifications is patently unreasonable. Golden Peanut Co. v. Hunt, 203 Ga. App. 469, 416 S.E.2d 896 (1992).
Assumption that parties intend specific price and quantity terms observed.- Though courts are free to apply custom and trade usage in interpreting terms, it should be assumed that specifications in contract as to quantity and price are intended to be observed by parties and unilateral right to make major departure from such specifications must be expressly agreed to in written contract. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
No need to negate applicability of trade usage to preserve written price and quantity terms.- If clause expressly negating applicability of trade usage is necessary to preserve specified price and quantity terms of a contract, the purposes of the Uniform Commercial Code will be quickly frustrated, for while consideration of commercial custom is an important aid in interpretation of terms of a contract, parties will have no choice but to foreclose use of such an aid if inevitable result of such consideration is to have explicit contracts negated by an evidentiary free-for-all. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 589 F.2d 1154 (5th Cir. 1978).
Complete and Exclusive Agreements
Effect of merger and disclaimer clauses.
- In contract actions, effect of merger and disclaimer clauses must be determined under provisions of Uniform Commercial Code. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).
Contract clause specifying that conditions not incorporated in contract will not be recognized indicates that writing was intended to be complete and exclusive statement of terms of agreement. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
Where writing appears to be complete and certain agreement and there is no evidence or allegation of fraud or accident, contract will be presumed to contain entire agreement, and parol evidence of prior or contemporaneous representations or statements will not be considered to add to, take from, or vary written instruments involved. R.S. Helms, Inc. v. GST Dev. Co., 135 Ga. App. 845, 219 S.E.2d 458 (1975).
"Consistent additional terms" refers to matters not dealt with in written contract.
- Evidence which may be admitted under O.C.G.A. § 11-2-202(b) pertains to agreements covering matters not dealt with in the written contract. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
O.C.G.A. § 11-2-202(b) cannot be used merely as an alternative means of introducing evidence of trade usage. See Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).
FraudCharge of fraud, if adequately alleged, may be established by parol evidence. See Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).
Even though contract is in writing, fact that it was induced by false representations may be shown by parol or extrinsic evidence as a sheer matter of necessity. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).
Evidence of fraud in procurement of contract.- Though terms of agreement may indicate existence of valid contract, it will not stand in face of proof evidencing fraud in its procurement. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).
Evidence that material term was founded on misrepresentations or was inserted or omitted fraudulently.- Fact that contract is in writing does not preclude introduction of evidence to show that material stipulation therein was founded on misrepresentations and fraud of one party, or was inserted or omitted by fraudulent means. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).
Tort action for fraudulent misrepresentation not precluded.
- The Uniform Commercial Code does not preclude an action in tort based upon fraudulent misrepresentation inducing sale where plaintiff proves by preponderance of evidence the elements of fraud and deceit recognized under Georgia law, and such a tort action cannot be controlled by the terms of the contract itself. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).
Procedure
Objection requirements of O.C.G.A. §§ 11-2-201(2),11-2-202, and11-2-207 applied to work orders issued by a home improvement store to a contractor for the purchase of carpeting because the contractor's installation service was incidental to the purchase of carpeting by the store's customers. On the other hand, change orders that dealt with services that the contractor was asked to provide over and above the initial installation of the carpeting were not subject to the requirements of the Uniform Commercial Code. Ricciardelli v. Home Depot U.S.A., Inc., F. Supp. 2d (DC Jan. 15, 2009).
Jury questions.
- Evidence of trade usage of terms is admissible to construe a contract, and whether delivery terms of contract have been breached presents issue of fact for jury. Warren's Kiddie Shoppe, Inc. v. Casual Slacks, Inc., 120 Ga. App. 578, 171 S.E.2d 643 (1969).
Question of reliance on alleged fraudulent misrepresentation in tort cases cannot be determined by provisions of contract sought to be rescinded but is a question of fact for jury. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).
RESEARCH REFERENCES
Am. Jur. 2d.
- 15A Am. Jur. 2d, Commercial Code, § 69. 29A Am. Jur. 2d, Evidence, § 1095. 67 Am. Jur. 2d, Sales, §§ 317-347. 68A Am. Jur. 2d, Secured Transactions, § 164. 72 Am. Jur. 2d, Statute of Frauds, §§ 216, 260.
C.J.S.- 32A C.J.S., Evidence, §§ 1168 et seq., 1183.
U.L.A.- Uniform Commercial Code (U.L.A.) § 2-202.
ALR.
- Admissibility of parol evidence to show that a bill or note was conditional, or given for a special purpose, 20 A.L.R. 421; 54 A.L.R. 702; 75 A.L.R. 1519; 105 A.L.R. 1346.
Oral agreement between joint obligors as to extent of liability inter se, 65 A.L.R. 822.
Parol-evidence rule: evidence of agreements as to manner or medium of payment of bill or note, or as to credit, setoff, or counterclaim with respect to the same, 71 A.L.R. 548.
Effect of statute of frauds upon the right to modify by subsequent parol agreement, a written contract required by the statute to be in writing, 80 A.L.R. 539; 118 A.L.R. 1511.
Parol evidence rule as affecting extrinsic evidence to show or to negative usury, 104 A.L.R. 1261.
Requirement of written contract as condition of mechanic's lien as affected by an oral modification, or a modification partly oral and partly written, of a written contract, or a subsequent modification in writing not registered or filed as required by statute, 108 A.L.R. 434.
Provision in sale contract to effect that only conditions incorporated therein shall be binding, 133 A.L.R. 1360.
Conflict of laws as to usage and custom, with respect to interpretation or performance of a contract, 60 A.L.R.2d 467.
Admissibility of oral evidence to show that a writing was a sham agreement not intended to create legal relations, 71 A.L.R.2d 382.
Application of parol evidence rule of UCC § 2-202 where fraud or misrepresentation is claimed in sale of goods, 71 A.L.R.3d 1059.
Modern status of rules governing legal effect of failure to object to admission of extrinsic evidence violative of parol evidence rule, 81 A.L.R.3d 249.
Affirmations or representations made after the sale is closed as basis of warranty under UCC § 2-313(1)(a), 47 A.L.R.4th 189.
Applicability of UCC Article 2 to mixed contracts for sale of consumer goods and services, 1 A.L.R.7th 3.
Applicability of UCC Article 2 to mixed contracts for sale of goods and services: distributorship, franchise, and similar business contracts, 8 A.L.R.7th 4.
Applicability of UCC Article 2 to mixed contracts for sale of business goods and services: manufacturing, construction, and similar contracts, 15 A.L.R.7th 7.