Parol Evidence

Question 1

What is parol evidence?

Answer 1

Parol evidence is any written or oral statement made prior to or contemporaneous with a contract.

Question 2

What is parol evidence used for?

Answer 2

Parol evidence is used to:
1) add a promise, or
2) interpret ambiguous contract terms

Question 3

Restatement § 214: in which 5 circumstances is parol evidence admissible?

Answer 3

To establish:
(a) whether or is not an agreement is integrated;
(b) whether agreement is partially integrated;
(c) the meaning of agreement terms;
(d) the existence of illegality, fraud, duress, mistake, lack of consideration, or other invalidating cause;
(e) grounds for granting remedies.

Question 4

Restatement § 202: 5 Rules to Aid Interpretation

Answer 4

1. Words and conduct in context, and if the principal purpose determinable, it is given GREAT weight.
2. All writings together.
3. Unless a different intention is manifested:
   (a) use normal meanings.
   (b) technical terms and words of art are to be given their technical meaning when used in transactions within that field.
4. Where an agreement involves multiple courses of performance by either party with knowledge of (a) the nature of performance and (b) opportunity to object to it by the other, any performance accepted/not objected to is given GREAT weight.
5. Wherever reasonable, the manifestations of intentions the parties re: a promise are to be interpreted as consistent with (a) each other and (b) any relevant course of performance/dealing/usage of trade.

Question 5

Restatement § 213: Parol Evidence exclusion

Answer 5

If a binding agreement is found to be fully integrated, parol evidence is not admissible.

Question 6

Final executed agreements are presumed to be:

Answer 6

Fully integrated unless a party is able to establish evidence otherwise.

Question 7

Hatley Factors to determine whether an oral agreement is admissible under the parol evidence rule under CL:

Answer 7

1) the PE does NOT contradict the main agreement; and
2) one would NOT naturally expect the terms of the PE to be contained in the main agreement.
3) The following factors are weighed:
a. The relative experience of the parties
b. Whether the parties are represented by counsel
c. The bargaining strength of the parties
d. Whether both parties consider the agreement to be complete
e. Whether the exclusion of the PE would lead to an unreasonable result (Yes = Partially Integrated, No = Fully Integrated).

Question 8

Kilday Rule: Parol Evidence Testimony

Answer 8

When information regarding existence of parol evidence is given under oath, the agreement is considered partially integrated as a matter of law.

Question 9

Mitchell Rule: 2 elements to permit oral agreement admission as PE.

Answer 9

1. It must be independent/collateral to main agreement.
2. It may not contradict the main agreement.

Question 10

Explain the two perspectives from which to view PE contradiction with contract terms:

Answer 10

1. Narrow: compare express provisions of contract against PE
2. Broad: if considering the PE would make one party gain more than bargained for, PE = bad

Question 11

Under UCC § 2-202, is trade usage admissible as PA?

Answer 11

Even if not expressly included in contract, trade usage is always admissible as PA.

Question 12

Under UCC, when can a merger clause be overruled and PA admitted?

Answer 12

Trade usage terms, even in the face of a merger clause, will always be admitted whether or not specifically used in the contract.

Question 13

Under UCC, how do you negate trade usage?

Answer 13

By specifically including negating language in the fully integrated final agreement.

Question 14

CL Natural Inclusion Test

Answer 14

Would PE naturally be included in K terms?

Question 15

UCC Certain Inclusion Test

Answer 15

Would PE certainly be included in K terms?

Question 16

CL: If an agreement is complete and fully integrated, is PE admissible?

Answer 16

No.

Question 17

CL: If an agreement is complete and partially integrated, is PE admissible?

Answer 17

Yes, provided the parol evidence does not contradict with/vary from the K terms.

Question 18

UCC: If an agreement is complete and fully integrated, is PE admissible?

Answer 18

Parol evidence is not but oral preconditions and trade usage is.

Question 19

Trade usage under UCC

Answer 19

Usage of trade of which the parties are or should be aware automatically supplements their agreement.

Trade usage supersedes merger clauses unless trade usage is specifically negated in the written agreement.