Parol Evidence Rule Flashcards
1
Q
What is the point of the parol evidence rule?
A
- The parol evidence rule prevents parties to a written contract from presenting “extrinsic” evidence of terms in a contract that contradict, modify, or vary the terms of a written agreement, when that written agreement is considered complete and finalized.
2
Q
What are the two kinds of contract integration?
A
- Partial integration
- Complete integration
3
Q
What is partial integration?
A
- Terms within K are intended as final expression of those specific terms.
o AKA “full integration” (what?)
4
Q
What is complete integration?
A
- K intended to represent a complete and exclusive statement of all the terms.
5
Q
What is a merger clause?
A
- A merger clause states that a writing contains complete/entire agreement (guarantees complete integration)
6
Q
Parol evidence can be used for which two purposes?
A
- To explain or interpret terms of a written contract
- To supplement terms of a written contract
7
Q
For which purpose would parol evidence be inadmissible?
A
- To contradict terms of a written contract
8
Q
What is the majority rule for parol evidence being used to explain or interpret terms of a written contract?
A
- Majority rule: Parol evidence is always admissible for this purpose.
o EXAMPLE: A and B have a written contract under the terms of which A agrees to sell B “all the uncut timber on my property.” Evidence of conversations between the parties during a visit to the timber site is admissible to explain that “property” means A’s country cottage and not A’s home in the suburbs.
9
Q
When may parol evidence be used to supplement terms of a written contract?
A
- Parol evidence is admissible for this purpose unless the K is completely integrated (i.e., has merger clause).
o EXAMPLE: A and B had a written contract under the terms of which A agrees to sell B “all the uncut timber on my property,” and the contract contained detailed terms with respect to the felling and transportation of the timber as well as a merger clause stating that the contract was “a complete and exhaustive account of the obligations between the parties.” Evidence of an oral agreement between the parties at the time of signing the contract that A would pay to have the trees inspected for termites before cutting would be admissible to supplement the agreement only if the court concluded that the contract was partially (rather than completely) integrated. Some courts would consider the merger clause to be conclusive on the question of complete integration and thus bar the evidence, but other courts would treat it as persuasive only, evaluate the proffered evidence of the supplemental oral agreement, and admit it if they concluded that the parties did not intend the previously drafted merger clause to bar it despite their subsequent signatures on the contract.
10
Q
Under which exceptions could parol evidence, in fact, be used to supplement the words of a completely integrated contract?
A
- UCC distinction: Trade usage, course of dealings, and course of performance can supplement a completely integrated agreement.
o EXAMPLE: Same facts as in the previous example, except A and B are logging companies and B offers evidence that sellers doing business in the commercial lumber trade invariably pay to have the trees inspected for termites before cutting. This evidence would be admissible even if the court concluded that the contract was completely integrated because under the UCC uncut timber equals “goods” and usage of trade evidence is admissible to supplement a written agreement.
11
Q
What is the general rule about using parol evidence to contradict the terms of a written contract?
A
- Rule: Parol evidence is not admissible for this purpose (if K is fully integrated).
o EXAMPLE: A and B have a written contract under the terms of which A agrees to sell B “all the uncut timber on my property.” Evidence of an exchange of letters between the parties in which they agreed that their agreement would not include the shady trees in the immediate vicinity of A’s country cottage would contradict the written expression-i.e., that A had agreed to sell B “all the uncut timber on my property”-and would therefore be admissible only if the court concluded that the quoted provision not intended by the parties to be the final word with respect to which timber would be cut (i.e., that the writing was not integrated). In making that determination, the court is free to consider the exchange of letters and other extrinsic evidence.
12
Q
Under which exception could parol evidence be used to contradict the terms of a written contract?
A
- UCC distinction: Course of dealing/course of performance may be admissible in sale of goods cases to “qualify” the meaning of an integrated term.
13
Q
Under which circumstances is the parol evidence rule not applicable (would not bar parol evidence)?
A
- Subsequent agreements
- Collateral agreements
- Attacks on the validity of the written contract
14
Q
What is an example of a subsequent agreement?
A
- EXAMPLE: Buyer and Seller enter into a written agreement for the sale of 1,000 widgets. Two months before delivery is to be made, the parties orally agree to modify the agreement and specify the goods as nonstandard type-Y widgets, with Buyer agreeing to pay an additional cost. Evidence of this modification would not fall within the parol evidence rule, as it was made subsequent to the execution of the written agreement.
15
Q
What constitutes a collateral agreement?
A
- PE rule will not affect agreements between parties that are entirely distinct from the written agreement of the K at issue.
o EXAMPLE: A and B execute a detailed written contract, complete with a merger clause, by which A agrees to sell A’s car to B. As part of the transaction, the parties orally agree that B may park the automobile in A’s garage for one year, paying $25 per month. Despite the completely integrated writing, either A or B may adduce evidence of the parking arrangement under the collateral agreement rule.
