Contracts II—The Law of THE Contract
I. Contract terms 4 CORNERS OF A CONTRACT
a. Identifying Express Contract Terms
i. Parol Evidence: Rule of substantive law that renders prior certain legal agreements certain and operative depending on whether agreement was partial or complete
1. Is PA offered to establish contract terms? àNo, PA is admissible for other purposes (Rest. 214, 215 cmt a)
2. Yes, Is there a binding integrated writing? (Rest 209) à No, PA is operative to establish terms
3. Yes, Is writing completely integrated (objective “four corners” vs. subjective intent approaches – Rest 210)? à No, PA is operative only if writing not contradicted (Rest. 213(1))
4. PA is operative only if outside the scope of writing (Rest. 213(2))
ii. Restatements
1. Rest. § 209 Integrated Agreements
a. Final written expression
2. Rest. § 210 Completely and Partially Integrated Agreements
a. Completely: exclusive statement; supersedes anything before it
b. Partially: can get more parol evidence
c. that a writing is or is not completely integrated may be proved with any relevant evidence.
3. Rest. § 213 Effect of Integrated Agreement on Prior Agreements – Parol Evidence Rule
a. Binding integrated agreement discharges prior agreements that are (1) inconsistent [Masterson], or (2) within the scope [Gianni]
4. Rest. § 214 Evidence of Prior and Contemporaneous Agreements
a. Are admissible as evidence to establish
i. whether writing is or isn’t integrated
ii. whether writing is partial or completely integrated
iii. meaning of writing
iv. validity or other remedy
b. Parol evidence allowed for purposes other than establish contract terms
5. Rest. § 215 Contradiction of
i. Writing is the focus of attention and it supersedes all previous undertakings when it appears complete and would ordinarily and naturally include alleged parol terms
b. Subjective ‘intent of the parties’
i. Writing is completely integrated when the parties intend it to be and it means what they intended it to mean
4. Lee v. Joseph E. Seagram & Sons, Inc. (purely collateral agreement—more subjective approach to integration)
a. Relocation of Lees to new distributorship was what Lee intended when they agreed to sell interest to Seagram
5. Nelson v. Elway (iron-clad merger clause—more objective approach to integration)
a. $50 per car not included in lot #2 sale agreement
iv. Contrasting Approaches to Determining Complete Integration
