Contract Law AMP - Parole Evidence Rule Flashcards
What does it mean if a term is “collateral” to a written agreement?
A The term deals with another agreement or prior agreement between the same parties, but is unrelated to the current subject matter of the agreement
B The term is related to the subject matter of the agreement but is not part of the primary promise
C The term is an essential term, which must be included for the agreement to be fully integrated
D The term describes the consideration given for the agreement
B
A “collateral” term is one that is related to the subject matter of the agreement but is not part of the primary promise. Parol evidence is often said to be admissible if the alleged parol agreement is collateral to the written obligation and does not conflict with it. The “collateral agreement” doctrine is hard to apply because it is conclusory. The Restatements of Contracts include a similar concept with a more definitive approach: the naturally omitted terms doctrine. The doctrine allows evidence of terms that would naturally be omitted from the written agreement. A term would naturally be omitted if it does not conflict with the written integration and it concerns a subject that similarly situated parties would not ordinarily be expected to include in the written instrument. By definition, a collateral term is not an essential term, as it is not part of the primary promise. Thus, a collateral term would not describe the consideration given, because consideration would be an essential term of a contract. While a collateral term might have some relationship to other agreements between the same parties, a collateral term is in some way related to the current subject matter of the agreement at hand. QUESTION ID: K0058A Additional Learning
Which of the following types of evidence is within the scope of the parol evidence rule?
A Evidence of a condition precedent to effectiveness to an agreement
B Evidence of an oral contemporaneous agreement
C Evidence concerning a formation defect
D Evidence showing the “true consideration” paid
B
Under the parol evidence rule, any other agreements made prior to a fully integrated agreement, as well as any oral agreements made contemporaneous with the writing, are inadmissible to vary the terms of the writing. Formation defects (e.g., fraud, duress, mistake, and illegality) may be shown by extrinsic evidence and are not within the scope of the parol evidence rule. Evidence of a condition precedent to effectiveness to an agreement is also not within the scope of the parol evidence rule because it is not altering a written agreement if the written agreement never came into being. The parol evidence rule will not bar extrinsic evidence showing the “true consideration” paid. Nonpayment of consideration may be admitted as a defense. QUESTION ID: K0055 Additional Learning
Under Article 2’s version of the parol evidence rule, a party may offer evidence of __________ to explain or supplement a fully integrated written contract’s terms.
A A prior course of dealing, usage of trade, or course performance
B A contemporaneous oral agreement
C A subsequent written agreement
A
Under Article 2, a party may offer evidence of course of dealing, usage of trade, or course of performance to explain or supplement a written contract’s terms. A course of dealing is a sequence of conduct concerning previous transactions between the parties that may be regarded as establishing a common basis of their understanding. A usage of trade is a practice or method of dealing, regularly observed in a particular business setting, and it may also be used to explain a contract because it justifies an expectation that it will be followed in this transaction. If a contract involves repeated occasions for performance by either party and the other party has the opportunity to object to such performance, any course of performance accepted or acquiesced to is admissible in determining the meaning of the contract. Any subsequent agreements of the parties are not relevant to explain or supplement the terms of a prior written contract. The parties may have changed their positions for any number of reasons. Under the parol evidence rule, if a writing is deemed to be an integration of an agreement, any other expressions, written or oral, made prior to the writing, as well as any contemporaneous oral agreements, are inadmissible to vary the terms of the writing. QUESTION ID: K0056A Additional Learning
When the parties to a contract express their agreement in a writing that is deemed an “integration” of their agreement, how will a court deal with evidence of other written or oral expressions relating to the bargain?
A Any oral expressions made prior to, or contemporaneous with, the writing are inadmissible to vary the terms of the writing, but any prior or contemporaneous written expressions are admissible to vary the terms of the writing
B Any other expressions, written or oral, made prior to the writing, as well as any oral expressions made contemporaneous with the writing, are inadmissible to vary the terms of the writing
C Any other expressions, written or oral, made prior to the writing, are inadmissible to vary the terms of the writing, but oral expressions made contemporaneous with the writing will be admissible to vary the terms of the writing
B
When the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain (i.e., the writing is an “integration”), any other expressions, written or oral, made prior to the writing, as well as any oral expressions made contemporaneous with the writing, are inadmissible to vary the terms of the writing. Once a writing is deemed an integration, other expressions may not be admitted to vary the terms of the writing; however, if there is uncertainty or ambiguity in the written agreement’s terms or a dispute as to the meaning of those terms, parol evidence can be received to aid the court in reaching a correct interpretation of the agreement. If the meaning of the agreement is plain, parol evidence is inadmissible. QUESTION ID: K0052C Additional Learning
With respect to a completely integrated written agreement, parol evidence can be received to aid a fact-finder when there is a dispute as to __________.
A the intent of the parties to the agreement
B a clause supplementing the agreement
C the inclusion of an additional term to the agreement
D the meaning of an ambiguous term within the agreement
D
If there is uncertainty or ambiguity in the written agreement’s terms or a dispute as to the meaning of ambiguous terms, parol evidence can be received to aid the fact-finder. Under the parol evidence rule, written or oral expressions made prior to the writing, as well as any oral expression contemporaneous with the writing, are inadmissible to vary the terms of the writing. Those expressions barred include those concerning additional, supplementing terms and those concerning the parties’ intent. If a writing is a complete integration, it may not be contradicted or supplemented. If the integration is only partial, it may be supplemented by proof of consistent additional terms. QUESTION ID: K0060 Additional Learning
Extrinsic evidence of a condition precedent to a fully integrated agreement is admissible, despite the parol evidence rule, because __________.
A It is not altering the written agreement—the agreement comes into being only if the condition is met
B Parol evidence can be received to aid a fact-finder in reaching a correct interpretation of an agreement
C One party is not obligated to perform under the contract upon the happening of the conditioned event
A
The parol evidence rule prohibits admissibility of extrinsic evidence that seeks to vary, contradict, or add to a complete integration. Other forms of extrinsic evidence may be admitted when they will not bring about this result; i.e., they will fall outside the scope of the parol evidence rule. When a party asserts that there was an oral agreement that the written contract would not become effective until a condition occurred, all evidence of the understanding may be offered and received. This would be a condition precedent to effectiveness. A condition precedent to effectiveness is not altering the written agreement because the agreement comes into being only if the condition is met. This should be distinguished from a condition subsequent or a condition precedent to performance under an existing contract. Parol evidence is inadmissible as to those conditions because they limit or modifies a duty under an existing or formed contract. It is true that parol evidence can be received to aid a fact-finder in reaching a correct interpretation of an agreement in the case of uncertainty or ambiguity in the agreement’s terms, but this is not the reason why conditions precedent are outside the scope of the parol evidence rule. A condition precedent is outside the rule because the contract is not yet formed. QUESTION ID: K0054A Additional Learning
Under the Article 2 version of the parol evidence rule, which of following may not be used to explain or supplement the terms of a written contract?
A Subsequent Agreements
B Course of Dealing
C Usage of Trade
D Course of Performance
A
Any subsequent agreements of the parties are not relevant to explain or supplement the terms of a prior written contract. The parties may have changed their positions for any number of reasons. The parties’ course of dealing may be used to explain a contract. A course of dealing is a sequence of conduct concerning previous transactions between the parties that may be regarded as establishing a common basis of their understanding. A usage of trade (i.e., a practice or method of dealing, regularly observed in a particular business setting) may also be used to explain a contract because it justifies an expectation that it will be followed in this transaction. If a contract involves repeated occasions for performance by either party and the other party has the opportunity to object to such performance, any course of performance accepted or acquiesced to is admissible in determining the meaning of the contract. QUESTION ID: K0056 Additional Learning
In interpreting and enforcing a contract, what does it mean to say that a writing is an “integration”?
A The writing is one of a series of writings that together satisfy the requirements of the Statute of Frauds
B The writing is the final expression of the parties’ bargain
C The writing is a signed, written confirmation of an oral agreement
sent by one party that is sufficient under the Statute of Frauds to bind both the sender and recipient
D The writing will be used as a source to interpret or clarify any uncertainty or ambiguity in an already existing written contract
B
An “integration” occurs when the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain. When there is an integration, the parol evidence rule provides that any other expressions, written or oral, made prior to the writing, as well as any oral expressions made contemporaneous with the writing, are inadmissible to vary the terms of the writing. If there is uncertainty or ambiguity in a written agreement’s terms or a dispute as to the meaning of those terms, parol evidence can be received to aid the fact-finder in reaching a correct interpretation of the agreement. If the meaning of the agreement is plain, parol evidence is inadmissible. The Statute of Frauds requires that certain contracts be evidenced by a writing signed by the parties sought to be bound. It does not require that the contract be in writing, only that there is a writing, or a series of writings, signed by the person sought to be held liable on the contract that reflect the material terms of the contract. For sale of goods contracts, a written confirmation that one party, within a reasonable time after an oral agreement has been made, sends to the other party that is sufficient under the Statute of Frauds to bind the sender is known as a confirmatory memo. A confirmatory memo will also bind the recipient so long as the recipient has reason to know of the confirmation’s contents and does not object to it in writing within 10 days of receipt. QUESTION ID: K0052A Additional Learning
For a writing to be considered an “integration” of an agreement between two parties, the parties must:
A Sign the writing
B Include all relevant terms of the contract
C Intend that the writing embody the final expression of their bargain
D Agree to a merger clause
C
A writing is an “integration” when the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain. Under the parol evidence rule, if a writing is deemed to be an integration of an agreement, any other expressions, written or oral, made prior to the writing, as well as any oral expressions contemporaneous with the writing, are inadmissible to vary the terms of the writing. It is not necessary that an integration include all relevant terms of a contract. In some cases a partial integration may occur. A partial integration may not be contradicted, but may be supplemented by proving up consistent additional terms. Some integrations may contain a merger clause, reciting that the agreement is complete on its face. While this strengthens the presumption that all negotiations were merged in the written document, it is not a necessary component of an integration. The parol evidence rule should not be confused with the Statute of Frauds, which requires certain types of agreements must be evidenced by a writing signed by the parties sought to be bound. Although the signatures of the parties, or lack thereof, may affect the enforceability of the contract under the Statute of Frauds, they are not an element of integration. QUESTION ID: K0052B Additional Learning
A completely integrated writing may not be contradicted or supplemented.
A partially integrated writing may:
A Not be contradicted or supplemented
B Not be contradicted but may be supplemented by proving consistent additional terms
C Be contradicted or supplemented
B
A completely integrated writing may not be contradicted or supplemented. A partially integrated writing cannot be contradicted, but it may be supplemented by proving up consistent additional terms. QUESTION ID: K0059A Additional Learning
When the parties to a contract have expressed their agreement in a completely integrated writing, a court will apply the __________ to determine whether any other expressions, made prior to or contemporaneous with the writing, are admissible to vary the terms of the writing.
A battle of the forms
B parol evidence rule
C mirror image rule
D statute of frauds
B
The parol evidence rule prohibits the admission of extrinsic evidence that seeks to vary, contradict, or add to a completely integrated writing. The mirror image rule is a common law rule that requires an absolute and unequivocal acceptance of each and every term of an offer before a contract will be formed. The statute of frauds is a defense to enforcement of a contract. It provides that certain agreements must be evidenced by a writing signed by the party sought to be bound. The battle of the forms is a provision of Article 2 that sets forth specific rules for determining which terms are included in a contract when the terms of acceptance do not match the terms of the offer. QUESTION ID: K0057 Additional Learning
When the parties to a contract express their agreement in a writing with the intent that the writing embody the final expression of their bargain, this is known as __________.
A an implied in law contract
B parol evidence
C a confirmatory memo
D an integration
D
When the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain, the writing is known as an integration. Parol evidence is a term referring to other expressions made prior to, or contemporaneous with, the writing. An implied in law contract, also known as a quasi-contract, is not a contract at all, but is a remedy to avoid unjust enrichment. A confirmatory memo is one between merchants that summarizes an oral agreement. QUESTION ID: K0052 Additional Learning
Despite the parol evidence rule, a party to a fully integrated written contract can always offer evidence __________.
A Contradicting a term of the agreement by way of a prior valid written contract
B Supplementing the terms of the agreement with proof of a contemporaneous oral agreement
C Explaining the meaning of a term in the agreement
D Attacking the agreement’s validity at the time of formation
D
The parol evidence rule prohibits admissibility of extrinsic evidence that seeks to vary, contradict, or add to a complete integration. Other forms of extrinsic evidence may be admitted when they will not bring about this result; i.e., they will fall outside the scope of the parol evidence rule. A party to a written contract can always attack the agreement’s validity. For example, the party might acknowledge that the writing accurately reflects the agreement but assert that the agreement never came into being because of a formation defect or an unfulfilled condition precedent. Once a writing is fully integrated, any other expressions about that content of the contract, written or oral, made prior to the writing, as well as any oral expressions contemporaneous with the writing, are inadmissible to vary the terms of the writing. Thus the parol evidence rule expressly prohibits both supplementing the terms of the agreement with proof of a contemporaneous oral agreement and contradicting a term of the agreement by way of a prior valid written contract. Only if there is uncertainty or ambiguity in the written agreement’s terms, or a dispute as to the meaning of those terms, can a party offer evidence explaining the meaning of the term to aid the fact-finder in reaching a correct interpretation of the agreement. If the meaning of the agreement is plain, parol evidence is inadmissible. QUESTION ID: K0055A Additional Learning
Which of the following statements is correct under the parol evidence rule?
A A completely integrated writing may not be supplemented, but it may be contradicted by proper extrinsic evidence
B A completely integrated writing may not be contradicted or supplemented, but a partially integrated writing may be supplemented by proving up consistent additional terms
C A completely integrated writing may not be contradicted or supplemented, but a partially integrated writing may be contradicted or supplemented by proper extrinsic evidence
D A completely integrated writing may not be contradicted, but it may be supplemented by proving up consistent additional terms
B
A completely integrated writing may not be contradicted or supplemented. A partially integrated writing cannot be contradicted, but may be supplemented by proving up consistent additional terms. QUESTION ID: K0059 Additional Learning
Which of the following is a condition precedent to effectiveness?
A A condition limiting a party’s duty under an existing contract.
B An agreement that a party to an existing contract is not obliged to perform until the happening of a certain event.
C A condition that triggers a contingency clause of a contract.
D An agreement that a contract will not become binding until a certain condition has occurred.
D
An agreement that a contract will not become binding until a certain condition has occurred is a condition precedent to the contract’s effectiveness. Under a condition subsequent to the formation of the contract, there is a contract, but a party is not obliged to perform until the happening of a certain event. This type of condition limits or modifies a duty under a formed contract and is subject to the parol evidence rule. A contingency clause might be included in such an existing contract. QUESTION ID: K0054 Additional Learning
