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Contracts
University of California, Hastings School of Law
Lefstin, Jeffrey A.

Parol Evidence Rule

When to apply:

There is writing that purports to represent the parties’ agreement
A party is trying to introduce extrinsic evidence
Prior or contemporaneous discussions
In order to prove terms of the agreement

Is the agreement partial integration, complete integration or no integration?

The 4 corner approach (minority rule): the court should confine its inquiries to the document itself:
Alternative approach (majority): Look at preliminary negotiations as well

To decide whether there is integration, consider: Is there a merger clause (strong evidence of integration, but not conclusive)? Does the writing omit a consistent additional term agreed to for separate consideration? Is there any term that is naturally included in that type contract but is now absent?

To what extent can parol evidence be admitted?

Writing

Status

Terms

Examples

Not an integration

Not final agreement

May contradict or add terms

Offer, docs related to negotiation

Partial integration

Final, not complete

May not contradict, but not add terms

Receipt (no return policy on it)

Complete integration

Final and complete

No inconsistent or additional terms

Land sale

UCC 2-202: Course of dealing or usage of trade may always be used to explain or supplement even if the agreement is a complete integration
Brown v. Oliver (sale of hotel, extrinsic: sale of furniture)
Does the case fall w/n the situations when Parol evidence rule doesn’t apply?

Parol evidence is admissible to prove defense or invalidity (duress, fraud, illegality, mistake, lack of consideration)

Stricter parol evidence rule (Montana): Sherrodd v. Morrison: Parol evidence admissible to prove fraud only when the alleged fraud does not relate directly to the subject of the contract

Separate Agreement (separate agreement needs separate consideration: I’m going to throw in the furniture is not a separate agreement)
Subsequent modification
Entitlement to equitable remedy (eg., Baxendale: parol evidence admissible to prove that the other party was notified of special circumstances which make damages foreseeable)
Interpretation of terms

Pearless case: Parol evidence admissible to interpret the term “Pearless” + Alternatively, parol evidence admissible to show invalidity of the contract coz’ there wasn’t a meeting of minds (ie, parol evidence showed the two parties interpreted the same term d

paid for the goods sent by sellers because such action shows that there’s an agreement
· Part performance alone will not satisfy the exception to the statute of fraud in the context of land transfer and contracts not to be performed w/n 1 yr

What kind of writing satisfies the statute of frauds?

UCC

Common Law

Signed
(Docs stored electronically ok; Electronic tape on 1800 open to argument à Whether the party reasonably believes the other writer intended to authenticate the document as the writing)
+ Imbalance: only signature of the person against whom enforcement is sought is needed

Yes
– Exception: b/w merchants, if the oral contract is reduced to writing + receiver didn’t contest w/n 10 days, that writing doesn’t have to be signed

Yes
– Linking unsigned docs to singed docs: Crabtree: Unsigned writing must refer to the same transaction (Majority view: unsigned writing does not have to specifically mention the signed one + oral testimony may be used to establish the link)