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Contracts II
South Texas College of Law Houston
Powers, Jean Fleming

Performance of the K
Interpreting the content of obligation
The Parol Evidence Rule
STATEMENT OF RULE—Where an agreement has been reduced to writing which the parties intend as the final and complete expression of their agreement, evidence of any earlier oral or written expressions is not admissible to vary the terms of the writing.
Test used—The parol evidence rule applies only where the parties intended the writing as a final expression of their agreements:
1.      Face of the agreement test—The old view was that the parties’ intent must be determined from the face of the agreement itself. Thus, if the written agreement appeared to be complete and final, no parol evidence could be admitted.
2.      Any relevant evidence—Many ct. now hold that any evidence may be admitted to determine whether the parties intended the K as a final and complete expression of their agreement.
Merger clauses in a K may indicate that the agreement is complete and final.
To show a collateral oral agreement—A party may claim that there were two separate agreements made-the first embodied in the writing, and the second a “collateral” oral agreement supported by the consideration of the first agreement (i.e., the “collateral” oral agreement is alleged to have been reached in consideration for the promises set forth in the written agreement). Parol evidence of a second agreement may be admitted since it does not affect the written agreement at all.
            Requirements—Parol evidence is admitted to show a “collateral” oral agreement if (1) its terms do not conflict with the written agreement and (2)the collateral agreement covers a subject that would not ordinarily be included in the agreement. R2K § 240
P. 577-633
1.      Can one party prove prior or contemporaneously (parole) orally agreed terms or conditions which alter or add to the writing and 2. how a ct. determines the meaning of language in dispute which is admittedly part of the bargain.
1.      Parole Evidence Rule 2. Interpretation
Integrated Writings and Parole Evidence Rule
Mitchell v. Lath (the completeness issue)
FACTS—Land K and Ice house
Look @ parol evidence rule ask if the K is written, and if it is final.
Basically, does evidence contradict the K?
For an oral agreement to vary a written condition, three conditions to be met.
1.      Smell test
2.      Cannot contradict express or implied provisions of the written K
3.      Must be one that parties ordinarily wouldn’t find in writing (not so connected with principal transaction as to be PART AND PARCEL of K)
The oral agr

ant to get to same point.
“When two arties have made a K and have expressed it in a writing to which they have both assented as the complete and accurate integration of that K, evidence, whether parol or otherwise, of antecedent understanding and negotiations will not be admitted for the purpose of varying or contradicting the writing.” Corbin § 573
When is a K complete?
4 corners approach (what is within the actual writing); but doesn’t go so far b/c you can’t really know by looking @ document to decide if complete. 
Cts. will instead look to suggested agreement and then ask questions.
-Traditional approach (objective)
(Ask what was the intent of the parties)
Would Reasonable person put in writing? If yes—untrustworthy
What reasonable and natural parties would do
In Masterson, the document was a deed and more likely to be formal and nothing on record indicating parties knew what was needed.
-Modern approach (Subjective)
Asks parties their intent as far as integration
Both Modern Approach and traditional will eventually lead to Parol Evidence Rule