The Parole Evidence Rule
Applies to ANY extrinsic evidence whether the evidence is written OR oral.
Court's are not entirely consistent as to whether this rule in fact applies.
All have similarities as to when, but are not necessarily specific in the ways that the rule should be applied.
Up to this point–been primarily focused on the formation of agreements.
In this chapter, we start to evaluate the terms and words in the agreement.
When does it apply?
Is used to PREVENT extrinsic evidence from being applied.
Hypothetical #1
Does the rule applyàyes it applies because the rule applies to PRIOR OR CONTEMPORANEOUS AGREEMENTS
2nd question–yes, it applies to writings, such as letters.
Gianni v R. Russell & Co.
“Where parties, without any fraud or mistake, have deliberately put their engagements in writing, the law declares the writing to be not only the best, but the only evidence of their agreement.”
Case takes place in 1924 (before Restatement Second was released)
· Written lease agreement exists between the two parties.
o Gianni is not disputing the existence of the agreement, but is instead contending that he was given the right to sell soda water EXCLUSIVELY throughout the building, and signed the contract based on this oral agreement.
o Believes that the exclusive right to sell soda was an entirely separate agreement, instead of a simple fact that was left out.
o Was it intended to be the complete contract?
· If yes, then the Parol Evidence rule tells us that we will not allow any external evidence that essentially defeats the purpose of even having the contract in the first place.
· However, if the intention of the contract was to not address certain issues, then we will allow extrinsic evidence to be admissible.
Court must then evaluate:
1. Was the contract complete?
2. Did the elements of the dispute fall within the parameters of the written agreement?
First step then is to look at the writing itself to determine if the contract is complete.
Writing might exist that indicates this; ex. “this is a complete contract” or “this is non-negotiable”
If this is hard to determine,
Will then want to determine whether or not the disputed topic is/was ever addressed in the binding agreement?
What are some issues that might be addressed that would lead to the belief that the contract is complete?
· Is it highly detailed?
o Does it address all possible issues or disputes.
o Doe it provide a solution if possible issues arise?
· Essentially, does it have everything that one would expect to see in a contract.
· Gianni however believes that this disputed term is in fact a separate agreement, and is not related to the contract agreed upon between P and D.
What tests were used to determine if the dispute fell within the written agreement?
· That the agreements took place at the same time.
· Were they related to the same subject matter?
· Also evaluated whether or not the alleged agreement was one that would typically come within the realm of the written contract.
o The court believes that if such an agreement had been made, it would have naturally been included in the written agreement, instead of separately.
So because this written agreement passed the two part test ( (1.) complete contract and the (2.) elements disputed were addressed in the written agreement), the court does not allow testimony that adds to or contradicts what was agreed upon in the contract.
Restatement § 209 — Integrated Agreements
(1) an integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement.
(2) Whether there is an integrated agreement is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule.
(3) Where the parties reduce an agreement to a writing which in view of its completeness and specificity reasonably appears to be a complete agreement, it is taken to be an integrated agreement unless it is established by other evidence that the writing did not constitute a final expression.
THE PAROL EVIDENCE RULE ONLY APPLIES IF THE WRITTEN AGREEMENT IS INTENDED TO BE A FINAL EXPRESSION OF THE PARTIES.
· Even if a writing is intended to be a final expression of some of the terms, that does not necessarily mean that it will be a final expression of ALL of the terms.
Restatement § 210–Completely and Partially Integrated Agreements
Completely Integrated–adopted by the parties as a complete and exclusive statement of the terms of the agreement. An integrated agreement adopted by the parties as a complete and exclusive statement of the terms of the agreement.
Partially integratedàAn integrated agreement other than a completely integrated agreement.
Restatement § 213–Effect of Integrated Agreement on Prior Agreements (Parol Evidence Rule)
(1) A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them. [Excludes only inconsistent terms; consistent addition terms admissible]
(2) A binding completely integrated agreement discharged prior agreements to the extent that they are within its scope. [Excludes inconsistent terms and consistent additional terms].
When determining whether the PER precludes evidence of inconsistent or consistent additional terms, the court must decide:
1. Whether the writing is integrated
2. If so, whether the writing is comp
cally be theirs to pay.
In this case, the clause in the contract indemnified the P of any damages from harm that occurs.
· Trial court believes that there are
1. Indemnifying the P incurring damages or
2. Indemnifying 3rd parties from damages
i. D claims that their clause was regarding 3rd parties.
The question remains though, is the D allowed to provide extrinsic evidence that would show an alternative way to interpret the clause.
The trial court believes that “the plain meaning rule” was a reasonable way to apply the language of the contract.
o The court also finds that the “plain meaning” leads to the ruling that no extrinsic evidence should be admitted, as the “plain meaning” of the language provided no ambiguity.
o The trial court leads the language in the context in the type of contract, believing that (“yeah…it could be a 3rd party indemnity clause”); however, the language seems to include the P as well.
· “we cannot admit any extrinsic evidence that would contradict the “plain meaning” of the language.”
Supreme Court of California:
· We don't look at just the language, but we look to all the relevant evidence; this will help determine the party’s intent.
· Steps to take:
1. Look at all the evidence
i. Is that evidence relevant or does it shed any light?
ii. Then we compare it to what is in the actual writing.
1. Does this evidence provide a reasonable interpretation to what is in the document.
· In each step we're looking at extrinsic evidence, but we're using them for different factors.
o So in the first step, we're looking at the evidence to establish the parties intent.
· Then, after deciding that ambiguity exists, we then look at the evidence to try and resolve the ambiguity.
· When talking about extrinsic evidence, it is any evidence that will help resolve these questions.
If the court then determines that the P's interpretation is invalid, we then do not look at any more evidence to resolve any ambiguity; as there is none.
