Contracts II
Terms
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- What is the Parol Evidence Rule?
- At minimum it says a writing by the parties to be the final written statement of their agreement (it is integrated) may not be contradicted by prior or contemporaneous statements, agreements, negotiations, etc. whether oral or written (extrinsic evidence):
- "Total or Complete Integration"
- 1. If the writing is final and is the complete written expression of the parties, a “total or complete integration exists and the writing not only may not be contradicted by extrinsic evidence, it may not even be supplements by consistent, additional terms. (paragraph 5, p. 420)
- "Partial Integration"
- 2. If the writing is final But is not the complete written expression of the parties, you have a “partial integration and although you may not contradict the writing, you may supplement the writing by extrinsic evidence—oral or written that is by consistent, additional terms (paragraph 5, P. 420)
- UCC 2-202
- 2. UCC 2-202 (goods) : Terms in an integrated writing may be explained/supplemented (but not contradicted) by inter, alia, course of dealing, course of performance, trade usage.
- Williston's View
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1.) The Williston View:
a. If merger/integration clause exists ( “this writing contains all the terms of the agreement of the partiesâ€, presume integration is TOTAL, unless merger/integration clause obtained by fraud, mistake, etc.
b. If NO merger clause, ask: Would it have been “natural†for the parties to have included the term in the writing? (ask this question for each proffered additional, consistent term. Not looking for acuatal intent of parties, but intent “ presumed†using reasonable person standard)
i. Yes? Total integration
ii. NO? partial integration
c. Williston rejected “four corners†and “Collateral Contract†as unworkable. His theory was adopted by R(I) and is majority theory used. - The PER does no apply to or exclude the following information (the evidence or information is admissible)
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1.) Evidence on whether the writing is integrated (final written statement of the parties) (judge considers ALL relevant information to determine whether writing is integrated.
2.) Statements/Agreements subsequent to the writing
3.) Evidence to interpret a writing
4.) Evidence to show that a condition to formation of contract exists (Pym, the conditional contract)
5.) Evidence to show matters of avoidance exists (fraud duress, mistake, etc.) - Interpretation of a contract
- If interpretation of an integrated writing requires the introduction of evidence, there are several tests or approaches to determine whether the evidence will be admitted:
- The Two- Step Approach
- 1. The two-step approach (non goods): Step one – proffer evidence to the Judge to demonstrate that the writing (or a term) is ambiguous; Step Two – if the judge agrees that there is an ambiguity, introduce evidence into the record to explain the ambigutity. (Pacific Gas Case)
- If interpretation does not require introduction of evidence, by rules of interpretation there are several rules of interpretation
- “Spelled out numbers take precedence over Arabic numbers. For example, if a contract reads “ twenty- two (20)†the number would be interpreted as “22†not “20.†This principle is evident when one writes a check
- Time line for Parol Evidence
- The period leading up to the execution of the writing is (subject to PER and not admissible). The Period after execution of the writing, is a modification is not subject to the rule. At the point of execution the oral agreement is subject to PER but, the written agreement may be part of a set of documents constituting the writing and should be admitted and evaluated.