Select Page

Contracts II
Stetson University School of Law
Zierdt, Candace

I.              Finding the Law of the Contract: Parol Evidence Rule, Interpretation, and Filling the Gaps
a.       What is in the contract: terms, additional terms, gaps, and conditions
b.      Overlaying question: What did the parties intend when they entered into the contrac
c.       Determining the subject matter- parol evidence and interpretation
d.      Trade usage, course of performance, and course of dealings come into play w/ issues of interpretation, parol evidence, or filling the gaps
 
Parol Evidence Rule
Generally, adding a new term to the contract either at the time of contracting, or at a time before contracting
                                                               i.      Goal is to add a new term, can be oral or written, into an already existing contract
                                                             ii.      Comes into play ONLY at the time of contracting or before
                                                            iii.      The addition of terms after the contract does not trigger PER
application- oral agreements, written memos, negotiations, or understandings taking place before the written contract is formed
PER does not apply to oral contracts, ONLY written ones
Integration- the final expression of the parties
                                                               i.      Total: the contract is totally complete and you cannot add anything to it. Thus, it is the total agreement of the parties and discharges prior agreements that are inconsistent with the existing contract
                                                             ii.      Partial integration: an agreement other than one which is totally integrated
1.      PE may be used to prove elements of agreement not reduced to writing when only part of agreement is integrated
merger clauses
                                                               i.      generally conclusive of a total integration under 4-corners doctrine, however
                                                             ii.      not always conclusive under naturally and UCC tests
exception to PER: cases of fraud, duress, mistake, or lack of consideration
 
A.                 Determining a PER problem
a.             If goal is to add evidence of prior negotiations, memoranda, oral agreements, or understandings to explain the contract, most likely PER
b.            Preliminary questions:
                                                                           i.                  Is there a written contract? If not, PER not applicable.
                                                                         ii.                  If so, what are parties attempting to do? (add a term, or disagree on a term in the contract)
 
B.                 Three Steps to PER analysis
(1)         Is the contract integrated (a final expression of the terms)
                                                                           i.      If in writing, a presumption of integration unless there is other evidence
                                                                         ii.      If no writing, no PER problem
                                                                        iii.      Agreements and negotiations prior to at the time of contracting are admissible to establish the writing is or is not integrated
                                                                       iv.      ASK- Can PER be admitted as other evidence to rebut the presumption. If so, does that work?
(2)         Is the contract totally or partially integrated- preliminary to determination of question regarding interpretation or application o

                                             i.      if term contradicts or varies- PER excluded that term
1.      evidence of prior agreements or negotiations are not admissible to contradict a term of the writing
                                                                         ii.      if term supplements or is consistent- the term is allowed
1.      consistent additional terms are admissible to supplement an integrated agreement (partial)
 
2.             Interpretation
a.       Generally, refers to something that is in the contract and goal is find out what it means
                                                               i.      Intertwines w/ PER, but the rule does not apply b/c you’re not trying to add anything into the existing written contract
                                                             ii.      Distinction from PER, interpretation looks at a specific term in the contract
b.      concept of ambiguity
                                                               i.      a term that is susceptible to more than one meaning
c.       rules to determine if there’s an ambiguity
                                                               i.      plain meaning rule or 4-corners doctrine: a court looks to the specific term and judge determines if the term is ambiguous or has plain meaning. ONLY LOOKS AT THE CONTRACT
1.      if a determined ambiguity exists, extrinsic evidence is admitted and becomes a question for the jury