3. Terms of the Contract Flashcards
The most controlling source of the terms of the contract are the
words in the written contract.
What triggers the Parol Evidence rule?
1) A Final Written Contract; 2) Earlier words of one or both of the parties.
What is the Policy/Premise of the Parol Evidence rule?
The underlying premise is that the final written version of a deal replaces earlier agreements, negotiations, and conversations.
The Parol Evidence rule is like a regular evidence rule in the sense that:
1) the issue is whether the evidence is admissible AND
2) admissibility often depends on the PURPOSE for which the evidence is to be introduced.
Parol Evidence Vocab - Integration
Written Agreement that court finds is the final agreement, triggers the parol evidence rule.
Parol Evidence Vocab - Partial Integration
Written and final, but not complete.
Parol Evidence Vocab - Complete Integration
Written and final and complete.
Parol Evidence Vocab - Merger Clause
Contract clause such as, “This is the complete and final agreement.”
Parol Evidence Vocab - Parol Evidence
Words of party or parties before integration, can be oral or written.
Evidence of earlier agreements cannot be considered for the purpose of
contradicting the terms in the written contract.
A court may consider parol evidence for the limited purpose of
determining whether there was a mistake in integration, i.e. a mistake in reducing the agreement to writing
The parol evidence rule does not prevent a court from considering evidence of earlier words of the parties for the limited purpose of
determining whether there is a defense to the enforcement of the agreement, such as misrepresentation, fraud, or duress.
The parol evidence rule does not prevent a court from considering evidence of earlier agreements to resolve
ambiguities in the written contract.
A court may not consider Parol Evidence of earlier agreements as a source of consistent, additional terms unless the court finds
1) that the written agreement was only a partial integration or
2) that the additional terms would ordinarily be in a separate agreement.
May conduct be a source of contract terms?
Yes. Three forms: 1) Course of performance; 2) Course of dealing; 3) Custom and usage to explain words in contracts or to fill gaps in contracts
