Parol Evidence Rule

Question 1

Parole Evidence Rule

Answer 1

A writing intended by the parties to be a full and final expression of their agreement may not be supplemented or contradicted by any oral or written agreements made prior to the writing.

The parol evidence rule governs the effect of a written agreement on any prior oral or written agreements between the parties.

Question 2

Parol Evidence

How the rule applies:

Answer 2

Before signing a written agreement, the parties typically engage in preliminary oral negotiations.

• They may exchange pieces of paper that are not intended to be contracts in themselves.
• When the written contract is finally signed, it may fail to include any treatment of some of the issues raised in these preliminary oral discussions or written documents, OR it may deal with these issues in a way that is different from their treatment in the earlier discussions.
• When this occurs, to what extent may one party later try to prove in court that these writings or discussions are part of the contract, despite their absence from the writing?

Question 3

U.C.C. §2-202:

Parol Evidence Rule

Answer 3

If a writing is a final expression of the parties’ agreement, it may not be contradicted by

• evidence of any prior agreement, whether written or oral,
• nor of any oral agreement that is contemporaneous with the writing.

Even a final expression may, however, be “explained or supplemented” (as opposed to “contradicted”) by:

• Evidence of course of dealing, trade usage, and course of performance; and by
• Evidence of “consistent additional terms” unless the court concludes that the writing was intended not only as a final statement, but also as a “complete and exclusive statement” of the terms of the agreement (i.e., a “complete” or “total” integration).

Question 4

Whether or not parol evidence is allowed is determine by whom?

Answer 4

A judge hears the arguments for and against it and then determines if the jury will be allowed to hear the evidence

Question 5

Parol Evidence Checklist

Answer 5

Step 1: Extrinsic evidence prior to or contemporaneous to the formation of the contract? (Look at timing)

• NO = does not apply. YES = then Step 2

Step 2: Does the Contract include an integration clause?

• YES = no extrinsic evidence NO = then Step 3

Step 3: Did the parties intend this to be a final writing? (Use extrinsic evidence to determine answer)

NO, parol evidence rule does not apply YES, parol evidence rule applies, but only excludes extrinsic evidence that is inconsistent or contradicts the writings.

Step 4: Complete expression of the parties? (Use extrinsic evidence)

Question 6

What is an integreation?

Answer 6

A document is an integration of the parties agreement if it is intended as the final expression of the agreement.

The parol evidence rule appliesonly to documents which are integrations - final expressions of agreement.

Question 7

Partial v Total Integration

Answer 7

A partial integration is a document that is intended to be final BUT is not intended to include all the details of the agreement.

• Parol evidence may be allowed that does not contradict a term of the writing.

A total integration is a document that is not only a final expression of agreement BUT ALSO **includes all the details of the agreement. **

• No parol evidence allowed which would either conflict OR add to the writing.

Question 8

Merger Clause

Answer 8

Most contracts contain a merger clause stating that the writing constitutes the sole agreement between parties.

The presence of such a clause makes it more likely a court will find the writing to have been intended as a total integration & thus not no parol evidence allowed.

Question 9

For ambiguous terms in a K, what are the 3 main approaches to determining the meaning?

Answer 9

1) Four Corners Rule - if judge determines a term is ambiguous, the judge may not consult extrinsic evidence, but must determine what the term means by looking within the four corners of the documents itself

2) Plain Meaning Rule - when the court goes to decide whether a term used in the agreement is ambiguous, the court

• will NOT hear evidence about the parties’ preliminary negotiations, BUT
• CAN hear evidence about the circumstances or context surrounding the making of the agreement

3) The liberal rule - evidence of the parties’ statements during their pre-K negotiations is admissable for the limited purpose of letting the trial judge determine whether the term is ambiguous